Charity Loses Bid To Revive $300M CDS Suit V. AIG

Law360, New York (June 1, 2010, 1:00 PM EDT) -- A New York appeals court has rejected the Starr Foundation's attempt to recover at least $300 million in losses its endowment allegedly suffered when American International Group Inc.'s stock collapsed in 2008.

A panel of the New York Supreme Court's Appellate Division affirmed a lower court's dismissal of the charitable foundation's complaint Thursday, ruling that the state law that governs damages recoverable for fraud — the "out-of-pocket" rule — only allows the recovery of losses that were a "direct result of the wrong."

"Here, the foundation...
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