Law Firm Files ERISA Class Case Against AIG
NU Online News Service, Dec. 1, 4:26 p.m. EST?A New York law firm has filed a class action lawsuit against American International Group alleging bid-rigging activity by the firm hurt employee pension funds.[@@]
The suit seeking unstated damages was filed in U.S. District Court in Manhattan by the Wolf Popper law firm on behalf of workers enrolled in the company's 401 (k) plan.
It alleged the firm's actions had violated the Employee Retirement Income Security Act and hurt the value of AIG stock acquired and held by present and former employees of AIG through the 401 (k) plan.
The lawsuit alleges that the operators of the AIG 401(k) plan violated federal pension law and their fiduciary duties by causing participants to invest or maintain an investment in AIG stock from Nov. 1, 1998 to the present during which time AIG failed to disclose certain improper business practices.
AIG, the law firm said, "touted itself as experiencing strong, sustainable growth, and as continuing to demonstrate positive results, when in truth, AIG was engaged in a plan whereby AIG paid so-called "contingent commissions" or kick-backs to certain brokers in exchange for "steered" business from the broker."
The suit also alleges that AIG was a major participant in a "bid-rigging" scheme created to shield itself and certain other insurance companies from competition.
"These business practices were illegal and inflated AIG's revenue and income, and, thus, the company's stock price. Moreover, because of AIG's central involvement in the scheme, the Company has been exposed to massive penalties and/or fines."
Last month the Charles Piven law firm also said it had filed a securities class action on behalf of shareholders who purchased AIG stock from Oct. 28, 1999 to Oct. 13 when New York Attorney General Eliot Spitzer filed suit alleging bid rigging by Marsh Inc. brokerage with AIG and other large insurers.
The Wolf Popper firm last month filed a similar pension class action suit in Chicago against Aon brokerage on behalf of the company's employees.
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