(Bloomberg) -- Pacific Investment Management Co. accusedAmerican International Group Inc. of misleading investors about“colossal” losing bets on unregulated credit-default swaps andsubprime debt before the 2008 financial crisis.

Pimco seeks to hold AIG accountable for tens of billions ofdollars in shares and bonds that were wiped out because of theinsurer’s exposure to the swaps and residential mortgage-backedsecurities. AIG falsely claimed its exposure was remote even in asevere situation, Pimco said in a complaint filed March 27 in statecourt in Santa Ana, Calif.

The case was filed by Pimco after it declined to join in a$970.5 million settlement along with other investors.

AIG last month won approval of the settlement with investorsover claims the company had misled them about risks tied to thesubprime mortgages. It was one of the biggest investor recoveriesstemming from the 2008 financial crisis.

“We regret that rather than participate in the fair andreasonable settlement negotiated in the class action proceedinginvolving the same issues, these plaintiffs have filed anindividual copycat action in an effort to obtain a windfallrecovery,” Jon Diat, a spokesman for New York-based AIG, saidWednesday in an e-mailed statement. “We will defend the casevigorously.”

Sixty-Three Funds

Sixty-three Pimco investment funds seek damages from AIG underU.S. securities law for stocks and bonds they bought from Oct. 18,2006, to May 12, 2008. They allege AIG’s offering documents for thesecurities either misstated or left out crucial information.

“As the truth emerged about AIG’s portfolios of credit defaultswaps and mortgage-backed securities, the resulting liabilities,and the fact that risks attendant to these portfolios had not beenmanaged or hedged, AIG common stock lost nearly all of its value,thus eliminating a critical ‘debt cushion,’ for a variety of AIGbonds, notes, debentures and preferred securities,” Pimco said inits complaint.

The case is Pacific Investment Management Co. v. AmericanInternational Group Inc., 30-2015-00779738, California SuperiorCourt, Orange County (Santa Ana).

--With assistance from Sonali Basak in New York.

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