Pacific Investment Management Co. accused American International Group Inc. of misleading investors about “colossal” losing bets on unregulated credit-default swaps and subprime debt before the 2008 financial crisis.

PIMCO seeks to hold AIG accountable for tens of billions of dollars in shares and bonds that were wiped out because of the insurer’s exposure to the swaps and residential mortgage-backed securities. AIG falsely claimed its exposure was remote even in a severe situation, PIMCO said in a complaint filed March 27 in state court in Santa Ana, California.

The case was filed by PIMCO after it declined to join in a $970.5 million settlement along with other investors.

AIG last month won approval of the settlement with investors over claims the company had misled them about risks tied to the subprime mortgages. It was one of the biggest investor recoveries stemming from the 2008 financial crisis.

“We regret that rather than participate in the fair and reasonable settlement negotiated in the class action proceeding involving the same issues, these plaintiffs have filed an individual copycat action in an effort to obtain a windfall recovery,” Jon Diat, a spokesperson for New York-based AIG, said last Wednesday in an emailed statement. “We will defend the case vigorously.”

Sixty-Three Funds

Sixty-three PIMCO investment funds seek damages from AIG under U.S. securities law for stocks and bonds they bought from Oct. 18, 2006, to May 12, 2008. They allege AIG’s offering documents for the securities either misstated or left out crucial information.

“As the truth emerged about AIG’s portfolios of credit default swaps and mortgage-backed securities, the resulting liabilities, and the fact that risks attendant to these portfolios had not been managed or hedged, AIG common stock lost nearly all of its value, thus eliminating a critical ‘debt cushion,’ for a variety of AIG bonds, notes, debentures and preferred securities,” PIMCO said in its complaint.

The case is Pacific Investment Management Co. v. American International Group Inc., 30-2015-00779738, California Superior Court, Orange County (Santa Ana).

–With assistance from Sonali Basak in New York.