8-KRegulation FDOther EventsExhibits & Filings

AMERICAN INTERNATIONAL GROUP, INC. 8-K Report, Temporary Suspension of Trading Under Employee Benefit Plans (Dec 13, 2010)

Filed December 13, 2010For Securities:AIG

Summary

This 8-K filing from American International Group (AIG) on December 13, 2010, primarily announces two key events. First, it details a temporary suspension of trading for AIG's directors and executive officers in company equity securities, effective from late December 2010 through early January 2011. This "blackout period" is due to a change in the third-party administrator for several employee benefit plans and is mandated by Sarbanes-Oxley Act regulations. Second, AIG discloses information regarding the settlement of consolidated derivative litigation related to its 2004/2005 financial restatements. A settlement agreement has been reached, contingent upon funding from director and officer insurance policies. The insurance carriers will pay $150 million, of which $90 million will be allocated to settle the derivative actions, with the net proceeds (after legal fees) ultimately benefiting AIG.

Key Highlights

  • 1AIG is implementing a trading "blackout period" for directors and executive officers from December 29, 2010, to the week of January 9, 2011.
  • 2The blackout is a result of a change in the administrator for key employee savings and thrift plans.
  • 3This trading restriction aligns with Sarbanes-Oxley Act (SOX) Section 306(a) and Regulation BTR.
  • 4AIG has reached a settlement agreement to resolve consolidated derivative litigation stemming from its 2004/2005 financial restatements.
  • 5The settlement is funded by Directors & Officers (D&O) insurance policies, totaling $150 million.
  • 6Of the D&O insurance payout, $90 million will be used to settle the derivative actions, with net proceeds reverting to AIG.
  • 7A settlement hearing is scheduled for January 18, 2011, in Delaware.

Frequently Asked Questions

The suspension, known as a "blackout period," is due to a change in the third-party administrator for several of AIG's employee benefit plans. This transition requires a temporary halt in trading to comply with regulations like the Sarbanes-Oxley Act (SOX) Section 306(a) and Regulation BTR, ensuring proper administration and preventing potential conflicts of interest.

AIG has reached a settlement agreement to resolve consolidated derivative complaints filed in relation to its financial restatements from 2004-2005. This settlement is contingent on funding from the company's Directors & Officers (D&O) insurance policies.

The D&O insurance carriers will pay a total of $150 million. Of this amount, $90 million is designated to settle the derivative actions. After deducting the derivative plaintiffs' attorneys' fees and other costs, the remaining net proceeds from this settlement will ultimately be returned to AIG.

A settlement hearing is scheduled for January 18, 2011, in Wilmington, Delaware. The settlement agreement and settlement notice, which are incorporated by reference into this 8-K filing, are available as Exhibits 99.2 and 99.3, respectively.