Court ruling is a partial victory for former chief executive Hank Greenberg
The US government acted unlawfully when it bailed out global insurance group AIG in 2008, a judge has found.
Judge Thomas Wheeler of the United States Court of Federal Claims found that the terms of the bailout were too stringent.
In September 2008, the US government acquired a 79.9% stake in AIG in return for $182bn (£117bn) of funding to save the insurer from collapse.
AIG has since repaid the money, resulting in a profit of more than $20m for US taxpayers.
The ruling has handed a partial victory to former AIG chief executive Maurice ‘Hank’ Greenberg, who sued the government over the terms of the bailout in 2011.
He argued that the terms of the bailout disadvantaged AIG in favour of US taxpayers.
The government argued that it had acted properly in safeguarding taxpayers’ interests.
But the judge did not award the $40bn of damages Greenberg and AIG shareholders had sought.
This was because he accepted the government’s argument that without the bailout, the company would have failed and shareholders would have got nothing.