NY Fed Dodges AIG Derivative Suit Over Bailout Scheme

Law360, New York (November 19, 2012, 3:06 PM EST) -- A New York federal judge on Friday tossed an American International Group Inc. shareholder derivative suit alleging the Federal Reserve Bank of New York strong-armed the insurer into paying the full value of its credit default swap contracts as a means to offer “backdoor bailouts” to global financial institutions.

U.S. District Judge Paul A. Engelmayer said that FRBNY has no fiduciary duty to shareholders because it did not control AIG in November 2008 when it struck the $64.3 billion Maiden Lane III transaction, which provided AIG...
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