A public pension fund in Louisiana is suing AIG for "imprudent risk taking and mismanagement."
The City of New Orleans Employees' Retirement System is suing the chief executive of American International Group (AIG) for shareholder losses, which it alleges are the result of imprudent risk taking and mismanagement.
The public pension fund is seeking the return to AIG of all compensation paid to the CEO and directors, among other damages.
Court documents showed the pension fund was claiming AIG chief executive Robert Willumstad and other board members were at fault for the firm’s exposure to and “grossly imprudent risk taking” in the sub-prime lending market.
The fund also claimed the board of directors failed to monitor operations and allowed AIG to market and extend sub-prime loans and insure sub-prime-related assets without considering borrowers' ability to pay and with “unreasonably high risk of default”.
