A federal judge on Monday refused to dismiss a class-action lawsuit accusing American International Group Inc of misleading investors about its exposure to subprime mortgages, which led to a liquidity crisis and $182.3 billion of federal bailouts.

U.S. District Judge Laura Taylor Swain said the plaintiffs alleged facts "giving rise to a strong inference of fraudulent intent" in how AIG communicated publicly about the risks in its portfolio of credit default swaps.

The lawsuit covers investors who owned AIG securities between March 16, 2006, and September 16, 2008, when AIG received its first bailout.

If approached by your broker (or financial advisor or insurance agent) to purchase an indexed annuity there are some things an investor should consider.  First, an indexed annuity (also known as, equity-indexed annuity or fixed indexed annuity) is a fixed annuity, either immediate or deferred, that earns interest or provides benefits that are often linked to an equity or stock market index.  In 2008, the National Association of Insurance Commissioners (NAIC), an association of state insurance regulatory officials, issued a buyers guide to indexed annuities, which provides educational information on indexed annuties.  Did your broker provide you with one?  The Financial Industry Regulatory Authority (FINRA) also published an investor alert on indexed annuities.

Unscrupulous brokers take advantage of naïve, unsuspecting investors, especially seniors, and heavily pitch purchases into indexed annuities.  Often they will tout indexed annuities as being better than bank CDs and will convince investors to liquidate their CDs to buy an indexed annuity.  Investors with variable annuities are often approached by a broker to buy indexed annuities, touting them as being safer than then variable annuity, which has investment choices whose principal can be subject to market volatility.  Did the broker recommend you to consider moving money into the fixed account of the variable annuity?  If not, the broker is probably only motivated to earn a commission which can be as high as 5%.  Another fraudulent tactic is to entice an investor with an “upfront bonus” to buy an indexed annuity but what a devious broker may not tell you is that often you would have to annuitize the annuity in order to take advantage of the bonus benefit – it’s not free money, there’s a cost to every benefit in an annuity.  Other brokers may convince you that the annuity they sold you earlier is now out-of-date and try to sell you another annuity claiming to have “better and more features.”

The Securities and Exchange Commission's chief enforcement official says the agency has toughened its efforts to shut down financial misconduct after failing to act quickly in the cases of R. Allen Stanford and Bernard Madoff.

SEC Enforcement Director Robert Khuzami says in testimony prepared for a Senate hearing that "we have moved aggressively" to put in place reforms recommended by the SEC inspector general. The IG found that the SEC knew since 1997 that Stanford likely was operating a Ponzi scheme but waited 12 years to bring fraud charges against the billionaire.

Khuzami also tells the Senate Banking Committee the SEC is working to provide "maximum recovery" to investors hurt in Stanford's alleged $7 billion fraud.

Stanford has been in federal prison since his indictment in June 2009 on criminal charges that his international banking business was really a pyramid scheme. He is disputing the charges. He faces a life sentence if convicted.

The SEC didn't bring civil fraud charges against Stanford until February 2009. SEC Inspector General David Kotz said in a report issued in April that "institutional influence" in the enforcement division was a factor in the agency's repeated decisions not to conduct a full investigation.

The report found that SEC enforcement officials discouraged cases that couldn't be resolved quickly. And it said an SEC enforcement official who helped quash investigations later legally represented Stanford.

The SEC's office in Fort Worth, Texas, had conducted "examination after examination" of Stanford's business over eight years, but "merely watched the alleged fraud grow, and failed to take any action to stop it," Kotz testified at Wednesday's hearing.