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Court Rejects Greenberg Firm's AIG Case

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A three-judge panel at the U.S. Court of Appeals for the Federal Circuit ruled Tuesday that Starr International Co. Inc. has no legal standing to challenge the 2008 federal government takeover of American International Group Inc.,

Maurice Greenberg, who is a founder and former longtime CEO of AIG, and who currently is the head of Starr International, has argued that the government trampled AIG shareholder rights in September 2008, when it took a 79.9% equity stake in AIG in exchange for providing a $85 billion stabilization loan.

(Related: Greenberg: AIG, Wall Street Bailout a ‘Government Ripoff’)

Greenberg and Starr have accused the government of using unlawful means to steal AIG, and of cheating AIG shareholders of about $25 billion.

The appeals court panel agreed with lawyers for the government that Starr lacks standing to pursue the claim, because the right to file a claim belongs exclusively to AIG, according to an appeals court opinion written by Chief Judge Sharon Prost.

A judge at the U.S. Court of Federal Claims earlier ruled that the government had committed an illegal exaction. The appeals court rejected that judgment and told the lower court to dismiss the Starr claims for direct relief on the stock-acquisition claims.

David Boies, Greenberg’s lawyer, said Starr will file an appeal with the U.S. Supreme Court. He noted that the appeals court ruled on Starr’s standing to bring the suit, but not on the underlying merits of Starr’s allegations that the government had taken control of AIG’s stock through unlawful means.

— Read Ex-AIG Head Greenberg Finally Gets to Tell His Story at Trial on ThinkAdvisor.