Former American International Group Chairman Hank Green Berg sued the company on Tuesday.
He accusing the insurance giant of material misrepresentations and omissions which 'caused him to buy shares of the firm in his deferred compensation profit-participation plan at an artificially inflated price, according a complaint, reports Bloomberg.
As a result of AIG's alleged misrepresentations, Greenberg paid excessive income tax on the shares. He is seeking to recover the difference in the price paid for the shares and their fair price without the misrepresentations. He also wants to recover the extra income tax he said he paid.
AIG said the suit is without merit and will defend itself, company spokeswoman Christina Pretto told Bloomberg.
The suit comes on the same day when the company's current Chief Executive Officer Gordon Liddy said Greenberg was leading the company when it created a financial products unit which eventually had more than $30 billion in writedowns. Today, the firm reporter more than $60 billion in losses for the latest quarter. It received more than $30 billion in the U.S. government's third bailout of the company. The U.S. is seeking to break up AIG into smaller units and has vowed to keep the company afloat due to its importance to the overall financial system.