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Jury finds against AIG in suit versus Greenberg

July 08, 2009|Associated Press

NEW YORK — American International Group Inc. lost a big round Tuesday in its court battle against former Chief Executive Maurice "Hank" Greenberg.

In an advisory decision, a federal jury in Manhattan found that a private investment firm controlled by Greenberg did not have to reimburse AIG for $4.3 billion in shares taken from a company retirement bonus fund in 2005, shortly after Greenberg was ousted as the insurer's CEO.

U.S. District Judge Jed S. Rakoff said he would issue a ruling in the case by the end of August.

"I give considerable weight to an advisory verdict, but in the end it is something that the court has to determine for itself, and I will make my own findings of fact and consultations of law," Rakoff said.

The jury deliberated for about half a day before issuing its decision.

The New York insurance giant had accused Greenberg -- through Starr International Co., a company he controls -- of plundering an AIG retirement program composed of $4.3 billion in stock. The questions raised during the civil trial boiled down to who controlled the fund and what its purpose was.

AIG has received $182.5 billion in federal aid since last fall, and the government has taken an 80% stake in the company. The company said it would use any proceeds from the trial to repay some of its loans from the government.

The case was unrelated to the company's recent financial crisis.

The insurer's attorney, Theodore Wells, said only that he was "disappointed in the verdict." He had asked the jury to recommend that AIG receive $4.3 billion and 185 million AIG shares from Starr International.

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