Compliance April 4, 2011

AIG Stock-Drop Claims Survive Dismissal Attempt

American International Group (AIG) must face claims by some current and former employees that their retirement funds were invested too heavily in company stock, Bloomberg is reporting.
Reported by

U.S. District Judge Laura Taylor Swain ruled AIG and some directors, including former board member and Chief Executive Officer Martin Sullivan must defend allegations of a breach of fiduciary duty in a lawsuit filed in 2008. She dismissed claims by participants in a Puerto Rican unit’s retirement plan.

According to Bloomberg, the judge said the remaining plaintiffs can try to prove that they sustained losses to their pension plans caused by the defendants breaching their duty by continuing to invest in AIG stock even when the company was on life-support; shares fell 97% in 2008.

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“Plaintiffs have sufficiently alleged that AIG and the director defendants were aware of the increasingly risky financial position maintained by AIG, material weaknesses in AIG’s financial health and the potential impending erosion of the value of AIG’s stock,” Swain wrote, according to Bloomberg.

Mark Herr, an AIG spokesman, said in an e-mail to Bloomberg: “We’re pleased the court dismissed portions of the case and will defend vigorously against the remaining claims.”

Products April 4, 2011

GSAM Launches High Yield Fund

Goldman Sachs Asset Management unveiled the Goldman Sachs High Yield Floating Rate Fund. 
Reported by

Goldman Sachs says it is a portfolio of non-investment grade floating-rate loans and other variable-rate securities issued by U.S. and foreign companies. The fund’s investment objective is to seek a high level of current income.

GSAM’s Global Corporate Credit team, part of GSAM’s Global Fixed Income team, will manage the fund. The Global Corporate Credit team will employ research and risk management capabilities and incorporate the best investment ideas across the senior bank loan market.

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With more than 40 investment professionals, the Global Corporate Credit team oversees $81.7 billion in credit assets as of December 31, 2010. The Global Fixed Income team, which oversees $299.6 billion in assets as of December 31, 2010, has more than 200 investment professionals located across the globe.    

The fund is offered in Class A and Class C shares, both with $1,000 minimum initial investments. The Fund also offers Institutional and Class R & Class IR Shares.   

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