NEW YORK (BestWire) — A federal judge in Michigan has rejected an attempt by American International Group Inc. to have an investor lawsuit dismissed, clearing the way for a possible trial in the legal dispute between the company and investors who accuse AIG of withholding information in the months before the financial crisis.

"Plaintiffs' allegations ... are adequate to plead material misstatements and omissions on the part of AIG," US District Judge Laura Taylor Swain wrote in her decision. "Defendants' motions to dismiss the complaint are denied in all respects."

The lawsuit's lead plaintiff is the State of Michigan Retirement Systems, representing the Michigan Public School Employees Retirement System, State Employees Retirement System, Michigan State Police Retirement System and the Michigan Judges Retirement System, according to court documents. The class of plaintiffs invested in AIG from 2006 to 2008 and now accuses the company of violating securities laws "by materially misstating the extent to which AIG had accumulated exposure to the sub-prime mortgage market through its securities lending programme and its credit default swap ... portfolio."

"This decision is not a ruling on the merits and simply allows the case to proceed to discovery," said Mark Herr, a spokesman for AIG.

"We are confident that when all of the facts come out, as they did during the course of the [US Department of Justice] and [Securities and Exchange Commission] joint two-year investigation, it will be clear that no fraud occurred and shareholders were not misled as to any of the risks."