Michigan to be lead plaintiff in AIG class action

By Chris Rizo | Mar 23, 2009

Mike Cox (R)

LANSING, Mich. (Legal Newsline)--Michigan has been named lead plaintiff in a national class action lawsuit against American International Group Inc., leaving Attorney General Mike Cox to represent the class.

Michigan sued the insurance giant, claiming the company misrepresented the risks of its investments with credit default swaps. The State of Michigan Retirement Systems invested in AIG on behalf of more than 600,000 state employees and judges.

Credit default swaps are contracts tied to risky debt, including subprime mortgage-backed securities.

Together with state Treasurer Robert Kleine, the attorney general will manage the class action on behalf of a group of AIG stock and bond purchasers as well as negotiate potential settlement terms.

"Our decision to pursue lead-plaintiff status sends a clear message that we will take every step necessary to recover lost funds and ensure our investments do not fall victim to fraudulent activity," Kleine said.

Last week, Cox lashed out at AIG executives for paying $165 million in bonuses despite being the recipient of nearly $170 billion in federal bailout funds aimed at keeping the company solvent.

"AIG has lost billions and is only surviving because of taxpayer-funded bailouts," Cox said. "The taxpayers deserve clear and complete answers about why millions of dollars of their money is going to pay bonuses to some of the very employees who contributed to the current financial crisis."

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.

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