A decision by American International Group Inc.'s board not to sue the U.S. government for allegedly giving short shrift to the giant insurer in its 2008 bailout is good news for its network of independent broker-dealers.
AIG said last Wednesday that it won't join a $25 billion investor suit led by Starr International Group Inc. and former AIG chief executive Maurice “Hank” Greenberg. According to the lawsuit, the federal government de-prived investors of tens of billions of dollars by concocting an allegedly sweet deal for the Federal Reserve to purchase an 80% stake in the company for $182 billion.
“In considering and ultimately refusing the demand before us, the board of directors properly and fully executed our fiduciary and legal obligations,” Robert S. “Steve” Miller, AIG's chairman, said in a statement. “America invested in 62,000 AIG employees, and we kept our promise to rebuild this great company, repay every dollar America invested in us and deliver a profit to those who put their trust in us.”
By turning around and suing the government, the company would have dramatically undermined the hard work and diligence by AIG's independent-broker-dealer network of 7,000 registered representatives and investment advisers to stabilize and rebuild since the painfully embarrassing and costly bailout.
Now simply called Advisor Group, this is the same network of broker-dealers that used to operate under the umbrella of AIG Advisor Group. Public anger over the bailout led to the decision to lop off AIG from the name.
That name change coincided with the wholesale re-branding in 2009 of one of its broker-dealers, AIG Financial Advisors Inc., as SagePoint Financial Inc.
The massive meltdown left broker-dealers despondent and shattered, particularly at SagePoint. About a quarter of that firm's brokers left in 2009, with at least another 5% leaving in 2010.
The firm now has about 1,800 reps and advisers.
“The AIG broker-dealers have done a very good job to improve their brands since 2008, all the while distancing themselves” from the parent company, said Larry Papike, president of third-party recruiting firm Cross-Search.
An AIG lawsuit against the federal government would have been “the last thing anybody at the AIG broker-dealers wanted,” he said.
“For AIG to insert itself into this discussion, just at a time when the company finally started to emerge from being the most vilified company in the world, was simply inexplicable,” said Larry Taunt, who left SagePoint in 2010 to join another broker-dealer.
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