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AIG Unit Faces A Sex Discrimination Suit

Posted on 25 Feb 2010

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American International Group's (AIG) derivatives unit, is being sued by two former vice presidents who said a "boys club" culture discriminated against older women.

One of the women alleged in the lawsuit that Joseph Cassano, the former head of AIG Financial Products, said he preferred young workers with 'curb appeal," not those who looked like his aunt.

A managing director appointed to handle sexual harassment complaints said AIG should replace some staff with young and attractive workers, according to the complaint filed Feb. 22 in federal court in New Haven, Connecticut.

Susan Potter, 56, and Deonna Taylor, 62, said AIG managers misled them about salary caps, paid younger and male employees more for similar work and fired them in retaliation for filing discrimination charges. Cassano ran Financial Products until March 2008 when AIG reported a $5.29 billion net quarterly loss fueled by his unit’s bets. The lawsuit is “disappointing” because Cassano treated staff fairly, his lawyer said. AIG denied any wrongdoing.

Cassano, 54, is facing criminal and civil probes into whether he misled investors about losses from swaps tied to subprime mortgages. Cassano, whose unit managed $2 trillion in derivative trades tied to bonds, currencies, commodities and stocks, told investors in December 2007 that “it is very difficult to see how there can be any losses” on contracts tied to home loans.

“AIG denies it discriminated or retaliated against these plaintiffs,” said Mark Herr, a spokesman for the New York-based insurer. “AIG prohibits discrimination on the basis of age, sex or any other protected category and is committed to providing employees with a workplace free from discrimination and retaliation.”

Financial Products “had many capable women at all levels, including in senior management, who thrived under Joe’s supervision, including these plaintiffs,” said Jim Walden, a lawyer for Cassano at Gibson, Dunn & Crutcher LLP in New York. “That they would now turn around and accuse Joe of tolerating, let alone encouraging, chauvinism is disappointing indeed. Joe Cassano hired, promoted, and supported employees based on a single criteria: merit.”