American International Group Derivative Litigation

Chimicles & Tikellis LLP filed a shareholder lawsuit, derivatively on behalf of American International Group, Inc. ("AIG" or the “Company”), in the Court of Chancery of the State of Delaware. The lawsuit alleges wrongdoing by several of AIG’s current and former officers and directors for improvidently subjecting the Company to losses from its exposure to, and grossly imprudent risk taking in, the subprime lending market and derivative instruments related thereto. The lawsuit alleges that while many financial institutions have recently suffered in connection with the subprime lending market and other related housing issues, the breaches of fiduciary duties alleged in the lawsuit have been especially egregious, and have, among other things, led to investigations into AIG’s valuation of various subprime-related contracts by the SEC and Department of Justice in June 2008. The lawsuit also alleges that the Defendant’s breaches of fiduciary duty have caused the Company to be bailed out by the Federal Reserve, placing the onus of Defendants’ mismanagement on AIG’s shareholders and the American taxpayers.

The lawsuit alleges Defendants are liable to the Company for : (a) abandoning and abdicating their responsibilities and fiduciary duties with regard to prudently managing the assets and business of AIG in a manner of consistent with the operations of a publicly held corporation; (b) failing to properly ensure compliance with federal and state laws requiring the dissemination of accurate financial statements; (c) marketing and extending subprime loans and insuring other subprime related assets without adequate consideration of the borrower’s ability to pay and with unreasonably high risk of borrower default; (d) causing and permitting the Company to misrepresent the Company’s business and financial results; and (e) exposing the Company to liability for violations of federal law.

On July 20, 2009, the Court stayed Plaintiff’s action without prejudice in favor of a derivative action pending in the Southern District of New York, captioned In re American Int’l Group, Inc. 2007 Deriv. Litig., No. 07 GV 10464 (LTS) (the “New York Action”).

On March 30, 2010, the New York Action was dismissed for failure to make pre-suit demand. On March 17, 2011, the United States Court of Appeals for the Second Circuit affirmed the dismissal of the New York Action.

On May 4, 2011, the Court lifted the stay of Plaintiff’s case and granted Plaintiff leave to file a second amended complaint. On May 13, 2011, Plaintiff filed a Second Amended Verified Shareholder Derivative Complaint (“Second Amended Complaint”). On June 17, 2011, Defendants moved to dismiss the Second Amended Complaint, arguing that the decision in the New York Action precluded Plaintiff from arguing, among other things, demand on the AIG Board was excused as futile. The Court has yet to set a date for argument on Defendants’ Motions to Dismiss.