SOURCE: Bernstein Litowitz Berger & Grossmann LLP

June 19, 2008 17:42 ET

Expanded Securities Class Action Suit Filed Against American International Group, Inc. and Certain of Its Senior Executives, Announces Bernstein Litowitz Berger & Grossmann LLP

NEW YORK, NY--(Marketwire - June 19, 2008) - Bernstein Litowitz Berger & Grossmann LLP today announced that it has filed a securities class action lawsuit against American International Group, Inc. ("AIG" or the "Company") (NYSE: AIG) and certain senior executives in the Southern District of New York on behalf of Ontario Teachers' Pension Plan Board ("Ontario Teachers") and similarly situated investors in AIG securities during the period of November 10, 2006 through June 6, 2008 (the "Class Period"). The action is captioned Ontario Teachers' Pension Plan Board v. American International Group, Inc., et al., No. 08-CV-5560.

The case was filed as a related action to Jacksonville Police and Fire Pension Fund v. American International Group, Inc., No. 08-CV-4772 (RJS), the first-filed securities class action in this matter, which is presently pending before the Honorable Richard J. Sullivan. Investors should note that the Ontario Teachers action expands the class period alleged in the Jacksonville action. We direct all interested investors to the notice published on May 22, 2008 in connection with the filing of the Jacksonville action pursuant to the Private Securities Litigation Reform Act of 1995. As set forth in that notice, investors wishing to serve as the lead plaintiff are required to file a motion for appointment as lead plaintiff by no later than July 21, 2008.

The Complaint alleges that during the Class Period, AIG and the individual defendants -- former Chief Executive Officer Martin J. Sullivan, former Executive Vice President and Chief Financial Officer Steven J. Bensinger, Senior Vice President and Chief Risk Officer Robert Lewis and Joseph Cassano, the former head of AIG subsidiary American International Group Financial Products ("AIGFP") -- violated the federal securities laws by issuing false and misleading press releases, financial statements, filings with the SEC and statements during investor conference calls. As alleged in the Complaint, throughout the Class Period, Defendants overstated the Company's earnings and financial position while repeatedly reassuring investors that AIG had successfully insulated itself from the turmoil in the housing and credit markets due to its superior risk management. In particular, defendants touted the value and security of AIGFP's "super senior" credit default swap ("CDS") portfolio, making numerous statements that this portfolio was secure and that AIG's method for accounting for the valuations of this portfolio was proper.

Investors began to learn the truth regarding AIG's financial condition and the Company's exposure to the mortgage market when, on February 11, 2008, the Company disclosed that its outside auditor had determined that there was a "material weakness in its internal control" over the financial reporting and oversight relating specifically to its accounting for the CDS portfolio, and that the Company was revising the loss valuations it previously reported. Under the new valuations, losses on the CDS portfolio more than quadrupled -- from the $1.4 billion reported on the CDS portfolio just weeks before to over $4.5 billion. Two weeks later, on February 28, 2008, AIG disclosed that the market valuations on the CDS portfolio would increase to $11.5 billion and revealed for the first time that the Company had notional exposure of $6.5 billion in liquidity puts written on collateralized debt obligations ("CDOs") linked to the subprime mortgage market. Then, on May 8, 2008, the Company disclosed that market valuation losses on the CDS portfolio for the quarter climbed an additional $9.1 billion, for a cumulative loss of $20.6 billion, and that the Company was expecting actual losses on the portfolio to be about $2.4 billion. On June 6, 2008 the Company disclosed investigations by the Securities and Exchange Commission and the U.S. Department of Justice concerning AIG's accounting and financial disclosures with respect to its CDS portfolio. As a result of these disclosures, the price of AIG stock plunged from a Class Period high of $72.81 per share on December 18, 2006, to $33.93 per share on June 6, 2008, wiping out tens of billions of dollars in shareholder value and causing damage to the class.

The Complaint asserts claims against all defendants under Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder, as well as claims against defendants Sullivan and Bensinger under Section 20(a) of the Exchange Act.

This case is filed as a separate case from a preexisting securities class action in the Southern District of New York arising from allegations concerning undisclosed bid-rigging and improper reinsurance transactions. That action, filed in 2004 and presently pending before the Honorable John E. Sprizzo, is captioned In re American International Group, Inc. Securities Litigation, No. 04-CV-8141 (JES) ("AIG I"). The lead plaintiff in the older AIG I action has sought leave to amend the action to encompass the allegations and time period at issue in the Jacksonville and Ontario Teachers actions. Ontario Teachers, which has suffered significant financial losses as a result of the alleged wrongful conduct that is the subject of the Jacksonville and Ontario Teachers actions, believes that these actions are and should remain separate from the AIG I action and that the interests of class members would be prejudiced by the proposed amendment of the AIG I action. Ontario Teachers intends to oppose any effort to amend AIG I to subsume the new actions into the older case.

Ontario Teachers is the largest single-profession pension plan in Canada, with over US$100 billion in assets. Ontario Teachers invests the pension fund's assets and administers the pensions of over 278,000 active and retired Ontario teachers. Ontario Teachers has significant experience serving as a lead plaintiff in securities class actions, including in In re Nortel Networks Corporation Securities Litigation, No. 05-MD-1659 (LAP) (S.D.N.Y.), in which a settlement worth over $1.3 billion was obtained for investors, and In re Williams Securities Litigation, 02-CV-72 (N.D. Okla.), which settled for $311 million shortly before trial.

The Ontario Teachers action is being investigated and prosecuted by Bernstein Litowitz Berger & Grossmann LLP and its subprime litigation group. The subprime litigation group is also representing investors in class and derivative subprime-related actions against Washington Mutual, Inc., American Home Mortgage Investment Corp., New Century Financial Corporation, Countrywide Financial Corporation and State Street, among others. More information about Bernstein Litowitz Berger & Grossmann LLP can be found online at

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    Bernstein Litowitz Berger & Grossmann LLP

    Gerald H. Silk