California Treasurer Phil Angelides and CalPERS President Rob Feckner today urged the state's two largest public pension funds to consider a variety of means, including legal action, to recover more than $400 million in losses incurred by the two funds from American International Group and its outside auditor, PricewaterhouseCoopers. The officials urged the funds to seek recovery, including possible legal action, for a 27% drop in AIG's stock price since Feb. 14, when federal and state regulators announced the firm was being investigated on allegations of bid-rigging and creating sham transactions to prop up its stock price.
"If these allegations are true, then AIG has emerged as the poster child of corporate corruption," Mr. Angelides said at a press briefing, comparing the scale of the stock losses to WorldCom Inc. (now known as MCI) and Enron Corp.
The officials also urged the $183.6 billion California Public Employees' Retirement System and the $126.9 billion California State Teachers' Retirement System, both of Sacramento, to press AIG to allow shareholders to nominate independent board directors, and to ensure that the insurer's outside auditor is truly independent. CalPERS and CalSTRS together own 20.9 million shares of AIG stocks.
AIG spokesman Andrew Silver declined to comment. A PricewaterhouseCoopers official did not respond to request for comment by deadline.