The state of Michigan will be the lead plaintiff in a lawsuit against AIG alleging violations of federal security laws and fraud on the part of the virtually bankrupt insurance giant that is now 80% owned by the federal government. A press release from the Attorney General’s office says:
 

AIG is one of the world’s largest insurance and financial service companies. The class action suit alleges that between November 10, 2006 and June 6, 2008, AIG mislead investors of the true value of Credit Default Swaps, which were securities tied to sub-prime mortgages. When the true value was revealed in 2008, AIG’s stock plummeted from more than $70 per share in 2007 to about $1 per share today.

As lead plaintiff, Michigan will manage the litigation on behalf of a class of AIG stock and bond holders, negotiate potential settlement terms, and seek to maximize the recovery for the class. If the case goes to trial, the lead plaintiff will lead all strategy decisions.

Michigan’s state employee pension program is one of the largest in the nation and had funds invested in AIG stock prior to the company’s demise last fall. They are seeking to recover losses incurred due to AIG’s alleged dishonesty. The state is also lead plaintiff in a similar suit against Bear Stearns.