Court Rejects Financial Planner’s Suit against AIG

A California court set aside a suit by a financial planner alleging that American International Group Inc’s risky business harmed her clients, Dow Jones reported.

California financial planner Linda M. Harris filed the suit this year in California state court. The suit contended that AIG’s financial product losses depleted the company’s capital, forcing it to raise prices for insurance customers, and put the company in danger of falling short on paying claims, according to the news report.

AIG argued that Harris wasn’t harmed by AIG and can’t sue over the insurance code, which is enforced by regulatory agencies.

The plaintiffs in the case purchased annuities with death benefits from AIG’s SunAmerica Annuity and Life Assurance Company, according to information about the case on the Web site of the plaintiff’s attorney, Michael J. Aguirre of Aguirre, Morris & Severson LLP. The site said AIG merged the stocks, bonds, and funds of its insurance companies into an internal hedge fund that was “recklessly exposed to market risks not permitted under insurance investment rules.” Furthermore, the plaintiff charged that AIG not only made risky moves in the derivatives market, but then covered up the losses and misrepresented information to policyholders. 

The ruling in favor of AIG gives the plaintiffs 30 days to amend their complaint and establish their standing to bring the action. Aguirre told Dow Jones he was optimistic that the plaintiff would prove their standing in an amended appeal he plans to file in January.