In a recent opinion, the Delaware Court of Chancery ruled on several motions to dismiss in the AIG Consolidated Derivative Litigation. The case, brought by stockholders of AIG and the company itself, alleged numerous claims against AIG top executives arising out of finite reinsurance transactions. Specifically, the allegations involved action by AIG insiders to misstate AIG's financial performance in order to deceive investors into believing that AIG was more prosperous than it really was. The single largest act of decption alleged involved a fraudulent $500 million reinsurance transaction in which various AIG insiders staged an elaborate artificial transaction with Gen Re Corporation. The AIG “Inner Circle Defendants” is comprised of AIG CEO Maurice R. Greenberg, CFO Howard I. Smith, Vice Chairman Edward E. Matthews, and Vice Chairman Thomas R. Tizzio. The stockholders asserted additional causes of action against former AIG employees and PriceWaterhouseCooper, AIG’s auditor. Virtually every defendant has moved for dismissal.
In a 104-page opinion, the Court dismissed the stockholders’ “due care” claim against defendant Tizzio, but otherwise denied all motions to dismiss as to defendants Greenberg, Matthews, and Tizzio finding that the amended complaint sufficiently stated an actionable claim. However, the Court determined that under Delaware law, it did not have a basis for personal jurisdiction over the former employee defendants and dismissed the claims against them without prejudice. Finally, the court ruled that New York law immunized PriceWaterhouseCooper from suit, and dismissed all claims against the auditor without prejudice. Am. Int’l Group, Inc. Consolidated Derivative Litigation, Case No. 769-VCS (Del. Ct. Chanc. Feb. 10, 2009).