An appellate court in New York has affirmed a trial court decision denying a private foundation the right to sue the AIG insurance companies for losses it suffered when the company’s stock declined precipitously in 2008. The Foundation argued that it was defrauded by AIG’s misrepresentations about the degree of risk stemming from its large credit default swap portfolio, and the foundation consequently failed to divest itself promptly of its 15.5 million shares. “Such a recovery,” the Court said, “would violate New York’s longstanding out-of-pocket rule, under which the true measure of damages for fraud is indemnity for the actual pecuniary loss sustained as the direct result of the wrong...