September 28, 2010 12:04 PM

"Granddaddy" of AIG Subprime Suit Goes On

Posted by Zach Lowe

Those folks wondering when company higher-ups are going to be punished for their roles in the economic collapse can take heart in one procedural victory: A federal judge Monday refused to dismiss a shareholder suit accusing AIG and top executives of making false statements about the insurance giant's exposure to subprime mortgages, according to our colleague Andrew Longstreth at The Am Law Litigation Daily. 

Longstreth describes the case as "one of the granddaddies of pending subprime securities litigation" and reports Judge Laura Swain of federal court in Manhattan didn't buy AIG's argument that the company's public filings contained enough cautionary language about subprime exposure. AIG has turned to Weil, Gotshal & Manges for counsel in the case, and the company was quick to point out that Swain's ruling did not touch on the merits of the lawsuit, Longstreth reports. The company said it is confident Swain will find no evidence of fraud. 

A pile of other Am Law firms are representing various current and former AIG executives, outside directors, and other entities named in the case. The roster includes: Akin Gump Strauss Hauer & Feld, Latham & Watkins, Simpson Thacher & Barlett, Cravath, Swaine & Moore, and Gibson, Dunn & Crutcher. The latter is advising Joseph Cassano, who headed up AIG's now-infamous financial products unit and is considered by many to be one of the villains of the financial implosion, the Lit Daily reports. 

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