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Attorney Says Appeal Almost Certain in AIG-SICO Suit

Posted on 14 Jul 2009

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There will almost certainly be an appeal of the judge's ruling in the federal civil suit between American International Group Inc. and Starr International Co., one of the lead attorneys has indicated.

"This case has a long way to go before it is over, and until all appeals are exhausted, it is premature to engage in postmortems," said Ted Wells, AIG's lead attorney in the suit over control of a large bloc of AIG stock.

Wells was responding to comments made by Lee S. Wolosky, a member of the firm representing SICO in the case, claiming that AIG used a failed strategy of making its former chairman, Maurice "Hank" Greenberg, a major focus of its case in a civil suit.

A federal jury sitting in New York issued a verdict that SICO, which Greenberg controls, did not loot nearly 100 million shares of AIG stock that AIG claimed was kept in a trust established to provide compensation for senior company executives.

U.S. District Judge Jed Rakoff said he may take until August to issue his ruling on whether SICO violated fiduciary responsibilities to AIG.

"Certainly, a strong element, a major element, of AIG?s case was to launch harsh attacks on Mr. Greenberg personally," Wolosky said of the seven days that Greenberg was on the stand during the trial. "It's clear that in the end he was totally vindicated, with respect to the assertions made by AIG at trial."

"AIG did not just focus on Hank Greenberg," said Wells, "and that is a mischaracterization of AIG's trial strategy. AIG continues to believe in the merits of its case, and we await Judge Rakoff's opinion."

Rakoff had ruled the jury would issue a verdict on the question of whether Starr improperly took to the stock, and an advisory opinion on the whether it violated a fiduciary responsibility to protect the trust's assets. He said that he would issue the binding ruling on the latter claim.

The jury returned its verdict after only a few hours of deliberation.

"The jury was able to parse through what the facts were and what the facts weren't," Wolosky said. "We were very gratified that they were able to do that and do it quickly."

Neither Wolosky nor Wells would comment on Rakoff's options in dealing with the jury's advisory verdict, or on their expectations for his opinion.

The jury swept aside all claims by AIG against SICO and Greenberg, who led AIG for nearly four decades before being forced out during an accounting scandal in 2005, surrounding control of the stock.

AIG sought control of the stock and $4.3 billion that it claims Starr reaped in selling 96.9 million shares of the stock between 2005 and 2009.

In his closing statement to the jury, Wells accused Greenberg of lying under oath and fabricating evidence to cover up looting the trust.