March 20, 2009

             LANSING - Attorney General Mike Cox and State Treasurer Robert J. Kleine today announced that the State of Michigan will serve as lead plaintiff in the national class action lawsuit against American International Group, Inc. (AIG).  The company allegedly violated federal securities law by misleading investors about the value of sub-prime related securities, costing Michigan pension funds and other investors billions of dollars.

    "We are putting investment firms on notice.  You will be held accountable for reckless actions that put the retirements of thousands of Michigan residents at risk," said Cox. 

    AIG is one of the world's largest insurance and financial service companies.  The class action suit alleges that between November 10, 2006 and June 6, 2008, AIG mislead investors of the true value of Credit Default Swaps, which were securities tied to sub-prime mortgages.  When the true value was revealed in 2008, AIG's stock plummeted from more than $70 per share in 2007 to about $1 per share today.

    As lead plaintiff, Michigan will manage the litigation on behalf of a class of AIG stock and bond holders, negotiate potential settlement terms, and seek to maximize the recovery for the class.  If the case goes to trial, the lead plaintiff will lead all strategy decisions.

    "The State of Michigan has an obligation to protect the pension funds for more than 574,000 participants and retirees," said State Treasurer Kleine. "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."

    SMRS, which invests on behalf of Michigan Public School Employees, State Employees, State Police, and Michigan Judges, holds combined assets of approximately $60 billion, making SMRS one of the largest pension systems in the nation. 

    Cox also commented on recent revelations that AIG will give approximately $165 million in bonuses as it teeters on the edge of a catastrophic failure.

    "Like most people, I was shocked to hear that a company depending on tax dollars for its very survival would give out bonuses," said Cox.  "It is actions like these that frustrate and anger so many hard working Americans who are struggling to make ends meet."  

    Cox is a strong advocate for Michigan citizens whose pensions or investments have been put at risk due to fraudulent activity.  In January 2009, Michigan was appointed lead plaintiff in a national class action case against Bear Stearns for nearly $62 million in losses to SMRS.  Cox has also brought action against Tyco for as much as $81 million in losses and HealthSouth for $33 million in losses, all to the state pension fund.  Cox also negotiated a settlement with Comerica Bank to release more than $1.4 billion in investments that were frozen due to the financial market troubles.

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