AIG May Join Shareholder Class Action Lawsuit Against US Federal Government After Emerging from Bailout

AIG, recovering from its $182 billion bailout from the United States federal government, is now considering joining its shareholders in a class action lawsuit against its corporate savior. Because of the fifth amendment to the United States Constitution preventing public use of private property without due compensation, former CEO Maurice “Hank” Greenberg brought forward his lawsuit which is being interpreted as a grasping move by an American corporation disgraced by its financial ineptitude and mismanagement.

According to Greenberg:

The government is not empowered to trample shareholder and property rights even in the midst of a financial emergency.

The New York Times‘ DealBook by Aaron Ross Sorkin had this excellent rundown of the complaints:

The choice is not a simple one for the insurer. Its board members, most of whom joined after the bailout, owe a duty to shareholders to consider the lawsuit. If the board does not give careful consideration to the case, Mr. Greenberg could challenge its decision to abstain.

Should Mr. Greenberg snare a major settlement without A.I.G., the company could face additional lawsuits from other shareholders. Suing the government would not only placate the 87-year-old former chief, but would put A.I.G. in line for a potential payout.

Yet such a move would almost certainly be widely seen as an audacious display of ingratitude. The action would also threaten to inflame tensions in Washington, where the company has become a byword for excessive risk-taking on Wall Street.

[New York Magazine]