American International Group sued two money management firms Thursday as the bailed-out insurer launched a fight to recoup billions of dollars it said it lost due to fraud.
The insurer, 92 percent owned by the U.S. government, sued ICP Asset Management and Moore Capital in New York State Supreme Court, contending it suffered huge losses by insuring mortgage securities that one of the financial firms created.
ICP could not be immediately reached for comment. A Moore spokesman said in a statement: “We haven’t seen the complaint, and therefore can’t comment on it.”
AIG, which received $182 billion in bailout money, said the suits were the start of a campaign to recover some of the losses it suffered as a result of others’ misconduct.
“At last year’s annual meeting, AIG CEO Bob Benmosche said we would review our dealings with all of the counterparties with which we did business before and during the financial crisis to see if they harmed us by their conduct. This suit is the first result of that review,” the company said.
The suit, by AIG’s Financial Products unit, indicated there was more legal action to come but the company would not comment on when or whether it would file further complaints.
“AIG-FP brings this action as part of American International Group’s overall efforts to recoup potentially billions of dollars from the fraudulent conduct of these defendants and other parties,” the complaint said.
The U.S. government rescued AIG at the height of the 2008 financial panic, pumping billions into the company, after it and other financial giants suffered huge losses from securities tied to a U.S. housing market crash.
The lawsuit said the defendants breached obligations to AIG related to the creation of complex collateralized debt obligations, or CDOs.
AIG said it has suffered more than $350 million in damages from the alleged misconduct, which included using inflated values on the mortgage bonds that were packaged into the CDOs.
By inflating the values, ICP created windfall profits for itself and swelled its management fees.
The lawsuit draws on allegations against ICP made by the Securities and Exchange Commission, which last year accused ICP of securities fraud. (Additional reporting by Martha Graybow and Noeleen Walder)
Was this article valuable?
Here are more articles you may enjoy.