AIG loses big round in lawsuit against former CEO Greenberg

— -- Former American International Group CEO Maurice "Hank" Greenberg won an interim legal win Tuesday when a federal jury in New York rejected arguments that a firm he controls improperly took $4.3 billion in stock from the insurance giant.

Jurors decided that Greenberg-controlled Starr International didn't breach a trust to hold the shares for an AIG retirement program. The panel also concluded the firm didn't illegally convert the shares after Greenberg was forced out in 2005 amid an accounting scandal.

The verdict in the case, issued after little more than half a day, is an advisory finding that may be upheld or reversed by U.S. District Judge Jed Rakoff. He said he would issue his ruling by next month.

"We are gratified by the jury's quick and complete vindication of Starr International and Mr. Greenberg, and the jurors' quick and complete rejection of the outrageous personal attacks on Mr. Greenberg's character by AIG and its counsel," said Starr International spokeswoman Liz Bowyer.

AIG, which has said the insurer would use any final decision in its favor to help repay the $182.5 billion federal bailout the firm has received from Washington, said the company was disappointed by the verdict.

"We await the court's final ruling. We continue to believe in the merits of our case," said AIG spokesman Mark Herr.

The case, filed in 2005, hinges on the legal control and purpose of the stock fund.

Greenberg, 84, built AIG over 35 years from a small firm into the world's largest insurance firm before the company almost collapsed during last fall's global economic meltdown. AIG argued that Greenberg, retaliating for his ouster, breached an oral trust by forcing AIG employees off Starr International's board and revoking the retirement plan.

Greenberg testified during the trial that Starr International received proper legal authorization over the AIG shares during a 1970 corporate reorganization. In court filings at trial, Starr International argued that AIG failed to produce proper evidence documenting the existence of an oral trust and never sought a return of the stock.