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Greenberg AIG Lawsuit Against U.S. to Proceed, Judge Says

Maurice “Hank” Greenberg can continue his lawsuit challenging the U.S. bailout of his former company, American International Group Inc. (AIG) without shareholder derivative claims on behalf of the insurer, a judge ruled.

Greenberg and other minority shareholders “have adequately alleged that they conveyed a portion of the economic value and voting power to the government and as a result suffered a direct and substantial impact to their own property rights,” Judge Thomas Wheeler of the Federal Claims Court in Washington wrote.

Wheeler today threw out derivative claims brought by Greenberg’s Starr International Inc., while saying he is “troubled that counsel for the Treasury Department (the defendant agency) made threatening statements to AIG’s board members.”

“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 AIG shareholders for tens of billions of dollars that the government took without just compensation and/or illegally exacted in 2008 and 2009,” David Boies, of Boies, Schiller & Flexner, an attorney for Starr, said in an e-mailed statement.

The case is Starr International Co. v. U.S., 1:11-cv-00779, U.S. Court of Federal Claims (Washington).

To contact the reporter on this story: Andrew Zajac in Washington at azajac@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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