AIG, banks say class-action group too large

By Ben Berkowitz

NEW YORK (Reuters) - Bailed-out insurer American International Group <AIG.N> and dozens of banks have filed motions in federal court to block a proposed nationwide class-action suit against them over AIG's 2008 near-collapse.

Their argument is that the proposed class is ultimately too large and too diverse to have anything in common, particularly citing the recent Supreme Court decision throwing out a class-action suit against Wal-Mart Stores Inc <WMT.N> on similar grounds.

AIG came within minutes of bankruptcy before the government rescued it in September 2008 with a bailout that ultimately totaled $182 billion. Even after a share sale last May, the government still owns 77 percent of the company.

The State of Michigan Retirement System, as lead plaintiff, has asked the federal court in lower Manhattan to certify a class consisting of anyone who bought AIG common stock from mid-March 2006 to the date of the bailout, plus anyone who took part in 101 different securities offerings over that time period.

But AIG, in its filing Wednesday, argued that the proposed class covered so many different time periods, so many different sets of circumstances prior to its bailout and so many different kinds of financial interests that it was impossible to say such a broad class had anything in common.

"(Given) the varied market conditions and disclosures, the diverse characteristics of the securities and the disparate interests of investors, Lead Plaintiff has not come close to carrying its heavy burden" to provide such proof, AIG said.

In a separate memorandum of law, the banks -- all underwriters on various AIG offerings over the period in question -- also argued that they do not have a sufficient amount in common to be sued as a class.

"These issues and defenses must be addressed offering by offering, underwriter by underwriter," they said.

Accounting firm PricewaterhouseCoopers <PWC.UL>, which was AIG's independent auditor, also filed a memo opposing class claims against it, saying the plaintiffs had no claim because various disclosures by PwC about AIG's finances were not material to bond investors.

The suit, which predates AIG's bailout, was filed in late May 2008.

The case is In re: American International Group, Inc. 2008 Securities Litigation, U.S. District Court, Southern District of New York, No. 08-04772.

(Reporting by Ben Berkowitz, editing by Dave Zimmerman)