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Aguirre, Morris & Severson, the San Diego law firm made up of former top officials of the city attorney's office, today (May 21) sued American International Group (AIG), the huge, deeply troubled financial conglomerate, for unlawful, fraudulent and unfair practices that threaten the welfare of insurance policyholders in California. It was filed in Los Angeles superior court on behalf of a La Quinta financial planner and her firm. The suit charges that AIG shifted hundreds of billions of dollars from its insurance operations to speculate in high-risk derivative products. AIG claims that there is a wall between its insurance and financial operations, but the suit claims that is decidedly not so. If there is no such firewall, then the government's $150 billion bailout of AIG "made no sense," says Mike Aguirre, a principal of the firm. The suit charges that the last time the firm was examined was more than five years ago by Delaware. The company has already admitted that it manipulated its books. Such activities drove the stock above $70, according to the suit. Today it closed at $1.69 and the company proposed a 1 for 20 reverse stock split that, in theory, would drive the price up by a factor of 20 while reducing the number of shares by a proportionate amount. A defendant in the suit is chief executive Ed Liddy; he announced today that he will leave as soon as a replacement is found.
Aguirre, Morris & Severson, the San Diego law firm made up of former top officials of the city attorney's office, today (May 21) sued American International Group (AIG), the huge, deeply troubled financial conglomerate, for unlawful, fraudulent and unfair practices that threaten the welfare of insurance policyholders in California. It was filed in Los Angeles superior court on behalf of a La Quinta financial planner and her firm. The suit charges that AIG shifted hundreds of billions of dollars from its insurance operations to speculate in high-risk derivative products. AIG claims that there is a wall between its insurance and financial operations, but the suit claims that is decidedly not so. If there is no such firewall, then the government's $150 billion bailout of AIG "made no sense," says Mike Aguirre, a principal of the firm. The suit charges that the last time the firm was examined was more than five years ago by Delaware. The company has already admitted that it manipulated its books. Such activities drove the stock above $70, according to the suit. Today it closed at $1.69 and the company proposed a 1 for 20 reverse stock split that, in theory, would drive the price up by a factor of 20 while reducing the number of shares by a proportionate amount. A defendant in the suit is chief executive Ed Liddy; he announced today that he will leave as soon as a replacement is found.