US Supreme Court Denies Starr International’s Lawsuit Over AIG Bailout
June 30, 2014 by Jeff Jeffrey
WASHINGTON – Starr International Co.’s lawsuit against the federal government over the bailout given to American International Group Inc. during the financial crisis will not be heard by the U.S. Supreme Court.
The justices denied Starr’s petition for a hearing in a brief note posted on the court’s website June 30. The justices did not give a reason for why the petition was denied. The decision not to hear the case leaves in place a ruling by the U.S. Court of Appeals for the Second Circuit that dismissed Starr’s claims against the New York Federal Reserve.
Starr sued the federal government to reimburse AIG shareholders $55.5 billion they allegedly lost as a result of the bailout. Starr argued the Federal Reserve forced AIG to enter into bailout terms that allowed AIG to gain a line of credit from the federal government.
AIG was offered the $85 billion with a 14.5% annual interest rate as long as the federal government took control of AIG as controlling lender and shareholder. The term sheet showed AIG had to provide the federal government an equity share in AIG of almost 80%.
Starr alleged that in forcing AIG to accept those terms, the federal government took AIG’s property, including 562,868,096 shares of AIG common stock owned by the plaintiffs.
The Second Circuit rejected that claim, upholding a lower court’s decision to dismiss the case (Best’s News Service, Jan. 29, 2014).
Shares of American International Group (NYSE: AIG) were trading at $54.72, the afternoon of June 30, up 0.21% from the previous close.
(By Jeff Jeffrey, Washington Bureau manager: jeff.jeffrey@ambest.com)
