The original complaint alleges that during the Class Period, defendants served as financial advisors who purportedly provided unbiased and honest investment advice to their clients. Unbeknownst to investors, defendants, in clear contravention of their disclosure obligations and fiduciary responsibilities, failed to properly disclose that they had engaged in a scheme to aggressively push AIG Advisor Group sales personnel to steer clients into purchasing Shelf-Space Funds that provided financial incentives and rewards to the AIG Advisor Group and its personnel based on holdings and/or sales. The complaint alleges that defendants' undisclosed sales practices created an insurmountable conflict of interest by providing substantial monetary incentives to sell Shelf-Space Funds, even though such investments were not in the clients' best interest. The AIG Advisor Group's failure to adequately disclose the incentives constituted violations of federal securities laws.
The class action lawsuit was filed against American International Group, Inc. and certain of its affiliates, on behalf of those who purchased from the AIG Advisor Group funds participating in the AIG Advisor Group revenue sharing programs during the Class Period. During the Class Period, the AIG Advisor Group consisted of the following broker-dealers: Royal Alliance, Inc., SunAmerica Securities, Inc., FSC Securities Corp., Sentra Securities Corporation, Spelman & Co., Inc., and Advantage Capital Corp. The Shelf-Space Funds included the following mutual fund families: AIG SunAmerica, AIM, AllianceBernstein, American, American Skandia, Columbia, Fidelity, Franklin Templeton, Hartford, John Hancock, MFS, NationsFunds, Pacific Life, Pioneer, Putnam, Oppenheimer, Scudder, Van Kampen, and WM.
On July 11, 2006, the Court granted the motion by the Martingano Group for consolidation, appointment as Lead Plaintiff and for approval of Stull, Stull & Brody as Lead Counsel is granted. The caption of these consolidated actions shall hereinafter be referred to as 'In re AIG Financial Advisors, Inc. Securities Litigation.' All relevant documents and submissions shall be maintained as one file under Master File No. 06-CV-01625(JG)(JMA). In addition, this Court requests the assistance of counsel in calling to the attention of the Clerk of this Court the filing or transfer of any case which might be consolidated as part of In re AIG Financial Advisors, Inc. Securities Litigation. Plaintiffs shall file a Consolidated Complaint within 45 days of this Order. Defendants shall move or answer within 30 days after the filing of the Consolidated Complaint. On August 25, 2006, the plaintiffs filed Consolidated Amended Class Action Complaint, and on December 1, 2006, the defendants filed a motion to dismiss the complaint. On April 25, 2007, the Court issued an opinion granting Defendants' motions to dismiss the complaint and granting Plaintiffs' permission to file a new amended complaint no later than May 24, 2007. On May 31, 2007, a Second Consolidated Amended Class Action Complaint was filed. Defendants filed a second round of motions for dismissal on June 22, 2007. On September 20, 2007 the judge ruled in favor of the defendants and dismissed the action with prejudice.
On October 25, 2007, the plaintiff filed a Notice of Appeal as to the dismissal of the action. On April 7, 2009, the Court entered the Mandate from the Second Circuit Court of Appeals, affirming the judgment of the District Court.