In Starr Foundation v. American International Group, Inc., 76 A.D.3d 25, 28, 901 N.Y.S.2d 246 (1st Dep't 2010), the plaintiff refrained from selling a large block of American International Group's ("AIG") common stock, based upon AIG's alleged public misrepresentations concerning the risks associated with its credit default swap portfolio.
The plaintiff claimed that it would have divested its ownership interests but for AIG's misrepresentations, but instead held the stock while its value declined.
The First Department affirmed the trial court's dismissal of the complaint, stating:
if the case were to go to trial, to establish liability and damages the plaintiff would be required (in addition to proving the fraudulent nature of the statements complained of) somehow to come forward with a nonspeculative basis for determining how accurate disclosure of the risk of the credit default swap portfolio beginning in August 2007--and such disclosure's hypothetical effect on the market at that time--would have affected the plaintiff's decision to sell or retain its AIG stock and the amount it would have received for the stock it hypothetically would have sold. Id. at 27.
In Starr Foundation, the plaintiff continued to hold its remaining AIG stock, even after the alleged fraud was exposed and the share price dropped. Id. at 30.
The Court stated that the "speculative nature" of the plaintiff's claim was underscored by the testimony of the plaintiff's president, who stated that he could not speculate as to whether the plaintiff would have sold all of its AIG stock had it known about the alleged fraud earlier. Id.
The Court concluded that "neither would it be appropriate for a jury to speculate on the answer to this question." Id.