Maurice Greenberg, the former chief executive officer of American International Group Inc (NYSE:AIG), can pursue a narrower case against the United States government related to terms of the $182 bailout during 2008 financial crisis, based on the ruling of a federal judge on Wednesday.
A report from the The New York Times stated that Judge Thomas C. Wheeler of the United States Court of Federal Claims allowed Starr International Company, the investment management firm controlled by Greenberg to continue its billion dollar lawsuit against the federal government, but the firm is not allowed to pursue the derivative claims in behalf of American International Group Inc (NYSE:AIG).
In his ruling, Judge Wheeler granted the motion of the federal government and the insurance giant to dismiss the derivatives claims of Starr International, and emphasized that the board of directors of the insurance giant acted in good faith in its decision to stay out of the lawsuit.
According to Judge Wheeler, American International Group Inc (NYSE:AIG)’s board made its decision in an “informed, transparent, rational, and exemplary fashion.” He also said that Greenberg’s Starr International “failed to allege particularized facts that create a reasonable doubt as to the good faith or reasonableness of the board’s investigation of Starr’s demand.”
Earlier this year, the American International Group Inc (NYSE:AIG) received criticisms particularly from members of the Congress for considering the idea of joining the lawsuit. Lawmakers opined that the insurance giant appears to be ungrateful to taxpayers for the government’s effort in saving it from bankruptcy.
AIG’s Board Of Directors Prohibited Greenberg From Filing a Lawsuit
In April, the AIG’s board of directors prohibited Greenberg from filing a lawsuit on behalf of the insurance giant. The board said it “had every right to decide, in the exercise of their business judgment, that suing the government for its rescue of A.I.G. is not the right thing for A.I.G. to do.”
Judge Wheeler also denied a motion of the federal government to dismiss the direct claims of Greenberg and other shareholders in the lawsuit.
David Boies, the attorney representing Greenberg, said, “We are pleased that the Court of Federal Claims has denied the motion of the United States, and permitted Starr International to pursue the claims of two classes of A.I.G. shareholders for tens of billions of dollars that the government took without just compensation and/or illegally exacted in 2008 and 2009.”
Greenberg claimed that the U.S. government violated the Fifth Amendment, and trampled shareholder’s property rights in the middle of a financial emergency when it decided to take over American International Group Inc (NYSE:AIG).