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NEW YORK - (Mealey's) American International Group Inc. (AIG) has agreed to pay $725 million to resolve a class action brought against it in a New York federal court by investors who allege that the company engaged in bid-rigging and accounting improprieties, Ohio Attorney General Richard Cordray said in a press release July 16 (In Re: American International Group Inc. Securities Litigation, No. 04-8141, S.D. N.Y.).
Cordray said that with the most current settlement, AIG shareholders can expect more than $1 billion in combined settlements. Previously, the lead plaintiffs in the class settled with General Reinsurance Co. for $72 million, with PricewaterhouseCoopers LLP for $97.5 million and with former AIG Chief Executive Officer Maurice R. "Hank" Greenberg and other AIG executives for $115 million, Cordray said.
As part of the agreement, AIG will pay $175 million to the class after preliminary approval is granted to the class. The remaining $550 million may be funded by AIG through one or more common stock offerings, Cordray said.
The lead plaintiffs - Ohio Public Employees Retirement System, State Teachers Retirement System of Ohio and Ohio Police & Fire Pension Fund - filed the proposed class action in 2004 in the U.S. District Court for the Southern District of New York against AIG, the former CEO and others.
The lead plaintiffs alleged that the defendants made numerous and repeated material omissions and misstatements that resulted in the artificial inflation of AIG's stated financial assets.
The lead plaintiffs sought to represent a class with regard to the alleged violations of Sections 11 and 15 of the Securities Act of 1993 and Section 10(b) of the Securities Exchange Act of 1934.
[Editor's Note: Full coverage will be in the August issue of Mealey's Emerging Securities Litigation. For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]
For more information, call editor Dylan McGuire at 610-205-1114, or e-mail him at Dylan.McGuire@lexisnexis.com.