The Resolution Law Group: AIG Settles Ex-Executive’s $274M Lawsuit Over Alleged Failure to Pay Him During 2008 Economic Crisis

American Insurance Group (AIG) and one of its ex-executives, Kevin Fitzpatrick, have reached a settlement deal over his $274 million lawsuit against the insurer. Fitzpatrick, the former president of the AIG Global Real Estate Investment Corp. unit, claims that his then-employer would not pay him during the 2008 economic crisis. The insurer’s refusal to pay occurred not long after the US government said yes to the first part of what would turn into a $182 billion bailout.

Fitzpatrick, who worked for AIG for 22 years, said that AIG breached agreements it had with him and entities under his control. He claims the agreements entitled him to a share of profits made on the insurer’s real estate investments but that on October 2008 AIG stopped paying him and others who were entitled to profit distributions. Fitzpatrick then quit.

Fitzpatrick sued in 2009, claiming that AIG owed him $274 million and that he wanted interest and punitive damages, which is right around the time that the insurer was trying to get past public disapproval over $165 million in bonuses that were paid to employees in the AIG Financial Products unit. That is the group that handled the complex financial instruments that led to its huge losses.

AIG denied wrongdoing and said that Fitzpatrick was paid what he was owed. The insurer contended that Fitzpatrick actually was fired and that he stole data that was confidential and belonged to the company.

In other AIG-related news, a district court judge just threw out a shareholder lawsuit accusing Bank of America (BAC) of not telling them that the insurer was planning to sue the bank with a $10 billion fraud lawsuit. AIG accused Bank of America of misrepresenting the quality of more than $28 million of MBSs that AIG bought from the latter and its Countrywide and Merrill Lynch (MER) units.

Also, there are reports that AIG might file mortgage-backed securities case against Morgan Stanley (MS) over $3.7 billion of MBS.

If you feel you are the victim of Securities Fraud, please do not hesitate to email or call the The Resolution Law Group (203) 542-7275 for a confidential, no obligation consultation.

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AIG Wants to Stop Former CEO Greenberg From Naming It as a Defendant in Derivatives Lawsuit Against the US

American International Group is asking a federal judge to prevent Maurice Greenberg, its former chief executive, from suing the federal government on its behalf. The insurer had already decided it wasn’t going to file a lawsuit against the federal government over its bailout that took place during the economic crisis.

Greenberg, who has filed a $25 billion securities lawsuit against the US, is pursuing derivative claims for the company. He claims that the bailout’s “onerous” terms cost the insurer’s investors billions.

While AIG isn’t trying to stop Greenberg from suing on his behalf or for other shareholders, the insurance giant has made it clear that suing the government over the rescue isn’t where it wants to focus its energy and resources. In its filing, AIG notes that according to Delaware Law, Greenberg, through Starr Investment, cannot take over the right of the AIG board to make the call on whether/not to sue.

All of AIG’s directors were unanimous in their decision not to have AIG join Greenberg’s securities lawsuit. He, however, claims that they succumbed to government pressure.

In its filing, AIG argues that its decision not to sue makes sense, seeing as the board believes that securities claims that Starr is making on its behalf may not be ‘slam dunk… winner,’ contrary to his claims. The insurer says that its own counsel thinks that chances of the derivatives lawsuit proving to be a success are “low.” They also believe that such litigation would harm AIG’s image, brand, and relationships with regulators, shareholders, customers, and elected officials while negatively impacting its attempts to rebuilding itself and pay back everything it owes the government.

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud

Annuity Assets are Hot Commodities Among Investment Managers Private-Equity Groups, and Hedge Fund-Controlled Entities

Wall Street Journal, October 17, 2012

According to the Wall Street Journal, Guggenheim Partners, Harbinger Capital Partners, and Apollo Global Management are just some of the money managers who have begun to acquire fixed annuities. These investments, which were sold by life insurance companies to conservative savers for decades, are now being seen by these newest buyers as a way to increase money under management. Many of these entities, which are controlled by private-equity groups, hedge funds, and other investment managers, believe that their investment savvy will allow them to discover profits where traditional insurance companies were unable to do so. Such acquisitions could provide a more stable income source.

For example, following its acquisition of a couple of midsize insurers this summer by its affiliates, Guggenheim, the $160 billion money manager. won credit-ratings upgrades. Meantime, Athene Annuity & Life, which said it would pay $415 million for Presidential Life Corp., will add about $3.5 billion in assets if Presidential shareholders approve the deal. As for Apollo Global Management, it is seeking to establish a retirement-savings company that is a market leader.

Some of these new annuity owners are offering products that come with terms that are now more generous for clients, while others want to make money off the business blocks they’ve acquired. The National Organization of Life & Health Insurance Guaranty Associations says that to get US consumers to buy annuities, firms have to set up state-based insurance units that are governed by the same risk-based-capital rules that other insurers have to follow.

A number of life insurers are still up for auction.

Most of those annuities were not good financial investments at the time because, despite what the investor was being told, the actual ‘internal rate of return’ to the investor was only 3.5% to 5.5%. Meanwhile, that investor could have earned a much higher return on other safe investments. Yet, as interest rates have plummeted, those same annuities have become good investments, while the insurance companies are losing money. Enter the money sharks! They first earn fees for creating insurance companies to take over those annuity contracts from the insurance companies.  Then these sharks can gamble with the annuity reserves to make higher returns than these pay out. But it is ‘heads’ they win, ‘tails’ the annuity owners lose and end up with nothing. Note that these money sharks are also using the rating agencies to boost the allusion that the new insurance companies being created are safe. Sound familiar? Remember all those AAA rated mortgage derivatives that were really worthless?

If you, your family, friends, neighbors or associates have been subjected to elder Annuity abuse, please contact our securities law firm at (203) 542-7275 for a confidential, no obligation consultation.

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud