* AIG Accused or ignore "red flags" about CDS Risk
* AIG shares close down 26 cents (New throughout, adds byline)
NEW YORK, March 30 (Reuters) - A Manhattan federal judge Dismissed a shareholder lawsuit battery cation current and Former American International Group Inc. (AIG.N) executives and directors or ignore "red flags," leading to the Insurer's near collapse and about $ 180 billion or federal bailouts.
U.S. District Judge Laura Taylor Swain on Tuesday accepted AIG's argument That shareholders led by the Louisiana Municipal Police Employees' Retirement System pension fund failed to first ask ITS board of directors to take action or show why Would Have Been Such A Demand futile.
A lawyer for the Louisiana fund did not return a call seeking comment Immediately. AIG spokesman Mark Herr Said the New York-based company was pleased with the 44-page ruling.
Conclusie was a So-Called "derivative" Complaint seeking remedies on behalf of AIG, "including restitution and" extraordinary "Equitable relief.
AIG officials or ignore it Accused the potential for Catastrophic losses from exposure to record credit default swaps, largely tied to subprime mortgage-related debt, through ITS AIG Financial Products unit.
These losses led to a series of bailouts That left the federal government with close to an 80 percent stake. AIG Has Been selling assets to the government RePay.
The Complaint alleged Also Stated That AIG ITS on health and risk management practices, only to then waste corporate assets in SEVERAL ways.
These included Authorize a costly buyback and dividend stock shortly before a Sept. increasefontsize. 2008 liquidity crisis Excessive pay awards to Chief Executive Robert Willumstad performer and Severance to His predecessor Martin Sullivan and AIG Financial Products, Former President Joseph Cassano, and Awards "Lavish" Retention bonuses to employees at Cassano's unit.
, According to Tuesday's opinion, the plaintiffs thought it futile to seek board help Because "wrongdoers" dominated the board at the time, and directors Would Have Been disinclined to effectively "sue Them elves" for Their actions and expose themself elves to potential personal liability.
But Swain Said the shareholders failed to show enough facts Creating a Reasonable Doubt That Were disinterested directors and the independent, or failed to exercise their business judgment Properly.
AIG shares closed Tuesday down 26 cents at $ 34.19 on the New York Stock Exchange. The decision was after U.S. ISSUED markets closed.
The case is In re American International Group Inc. Derivative Litigation 2007, U.S. District Court, Southern District of New York (Manhattan), Vol. 07-10464. (Reporting by Jonathan Stempel;
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