California’s treasurer Phil Angelides urges the state’s two largest pension funds that incurred losses totalling $400 million from the decline in American International Group’s stock price to launch lawsuits to recoup the loss to retirees’ funds. The treasurer expressed the idea in two separate messages to the California Public Employees’ Retirement System and the California State Teachers’ Retirement System.

"It is now clear AIG’s auditing process was flawed," he said in a news conference. "We’re going to get our money back, press for reforms at AIG and call other institutional investors to join us in this cause."

The suit will be directed at AIG’s auditor PricewaterhouseCoopers (PWC), the insurer itself and any executives who will be found guilty of manipulating the numbers. Angelides also pushes for a reform at AIG, America’s largest insurer, so as to sanction nomination of independent directors to the company’s board.

PWC was ratified as the insurer’s auditor even though it was also performing some consulting work for AIG. Angelides believes the suit should encourage the ban on such arrangements.