NY judge clears Pimco to pursue California lawsuit against AIG
By Jonathan Stempel
(Reuters) - A federal judge on Monday cleared the way for Pacific Investment Management Co to pursue a California lawsuit accusing American International Group Inc of causing big losses by lying about its subprime mortgage exposure before its 2008 bailout.
U.S. District Judge Paul Crotty in Manhattan said it made sense for a California state court to handle Pimco's case, rather than have him decide, as AIG wanted, whether the unit of German insurer Allianz SE waited too long to sue.
Jon Diat, an AIG spokesman, said the Manhattan-based insurer disagreed with Crotty's decision but looks forward to defending against Pimco in California.
Timothy DeLange, a lawyer for Pimco, declined to comment.
AIG had in March 2015 won court approval of a $970.5 million class action settlement over its exposure to subprime mortgages and credit default swaps, culminating in $182.3 billion of federal bailouts.
Pimco, which oversees $1.5 trillion of assets, chose to opt out of that settlement, which some plaintiffs do when they hope to recover more by suing on their own.
The Newport Beach, California-based firm sued AIG a week later in an Orange County state court, on behalf of more than 60 funds including the flagship Pimco Total Return, over securities it bought between 2006 and 2008.
AIG then sued Pimco a month later, seeking a declaratory judgment that Pimco's federal securities law claim was stale. Continued...