Legal News

Retired judge vs. AIG over bonus program

By Richard Binder

A lawsuit filed yesterday in Los Angeles Superior Court accuses AIG of constructing an executive compensation program to guarantee bonuses, even as the company knew it was sliding into insolvency due to its fraudulent activities.

AIG has countered that it was legally obligated to pay the bonuses because its compensation program was put in place before the company was given access to $70 billion in direct federal bailout money and much more in loans.

But the suit puts together a detailed timetable for AIG's financial meltdown and outlines the company's compensation system, set against the backdrop of two criminal investigations that were being conducted into the company's practices over the last eight years.

The lawsuit was filed by retired California Superior Court Judge John Bible, an AIG shareholder, and seeks unspecified damages. Bible is represented by Joseph Cotchett, a Bay Area securities litigation attorney who handled suits against Lincoln Savings during the savings and loan debacle of the 1980s.

Read details at LA Times.

Full post as published by Legal Pad | LA on April 02, 2009 (boomark / email).