AIG Junior Subordinated Debentures, Series A-5

On June 22, 2007, AIG filed a Registration Statement with the SEC, indicating its intent to make a public offering of its Junior Subordinated Debentures, Series A-5 (“AIG Junior Debentures A-5”). Later that year, in December of 2007, AIG filed its Prospectus for the AIG Junior Debentures A-5. In connection with the offering of the Junior Debentures, AIG retained the following brokerage firms to underwrite the offering:

Bank of America Securities
Bear Stearns n/k/a JPMorgan Chase
Citigroup Global Markets
Merrill Lynch
Morgan Stanley
RBC Capital Markets
UBS Securities
Wachovia Capital Markets
Wells Fargo Securities

We believe that the Prospectus issued by AIG for its Junior Debentures A-5 contained misstatements and omissions. Specifically, we believe the Prospectus failed to disclose that AIG was laboring under several adverse factors including the following: (i) AIG did not have a relatively small exposure to loss associated with credit swaps sold by certain variable interest entities; (ii) AIG's exposure to loss associated with credit protection assumed by AIG Financial Products Corp. and AIG Trading Group Inc., including their respective subsidiaries on portfolios of loans or debt securities was not remote, even in severe recessionary market scenarios; and (iii) AIG's financial statements and financial information, as contained in and incorporated by reference into the Prospectus, were not presented in conformity with Generally Accepted Accounting Principles.

Additionally, we believe that the underwriters for the Junior Debentures A-5 could have and should have discovered AIG’s misstatements and omissions contained in the Prospectus before it was filed with the SEC and distributed to the investing public. These underwriters were required to conduct due diligence of the risks associated with the AIG Junior Debentures A-5, as well as the accuracy of the information contained in the Prospectus. Further, brokers and financial advisors may have purchased an unsuitable amount of AIG Junior Debentures A-5 in their clients’ accounts, thereby creating a significant over-concentration. Over-concentration exists when 10% or more of the investment portfolio is invested in a single security or sector.

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