AIG and some directors, including former board member and Chief ExecutiveOfficer Martin Sullivan, must defend allegations of breach of fiduciary duty in a lawsuit filed in 2008, according to Swain. She dismissed claims by participants in a Puerto Rican unit’s retirement plan.
The remaining plaintiffs can try to prove that they sustained losses to their employee pension plans because the defendants breached their duty by continuing to invest in New York-based AIG in the face of risks the company was facing, the judge said. The shares fell 97 percent in 2008.
“Plaintiffs have sufficiently alleged that AIG and the director defendants were aware of the increasingly risky financial position maintained by AIG, material weaknesses in AIG’s financial health and the potential impending erosion of the value of AIG’s stock,” Swain said.
The judge said the Puerto Rico defendants failed to establish that they had standing to bring the suit or experienced injury.
“We’re pleased the court dismissed portions of the case and will defend vigorously against the remaining claims,” Mark Herr, an AIG spokesman, said in an e-mail today.
AIG said the pension plans mandated that company stock be offered to participants as an investment option, and that because no defendant had discretion to limit or cancel the option, they had no fiduciary authority or responsibility with respect to the “maintenance and continuation” of the fund, the judge said, citing defense arguments.
Swain disagreed. “Plaintiffs have alleged sufficiently that AIG had discretionary authority under the plans that carried with it fiduciary responsibilities,” she said.