U.S. District Judge Laura Taylor Swain refused this week to dismiss a securities fraud lawsuit accusing American International Group Inc. (AIG) of misleading investors about its exposure to subprime mortgages. Swain wrote that the allegations in the class-action lawsuit were sufficient to suggest there was "a strong inference of fraudulent intent'' in how AIG communicated publicly about the risks in the portfolio of credit default swaps.

Yesterday’s ruling allows the case to go forward, opening the door to a trial—and negative exposure—AIG has been avoiding.  

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