New York federal court gave a preliminary approval to American International Group’s $725 settlement deal with Ohio public pension funds. It’s another forward step in AIG’s effort to resolve ongoing legal dispute with investors in the consolidated 2004 securities litigation.
AIG and the parties involved in the lawsuit reached the settlement in July 2010. The next step is a “fairness hearing,” scheduled for Jan. 31, 2012. It will determine whether the proposed settlement is fair and reasonable.
The settlement involves the consolidated 2004 securities litigation. AIG’s 2010 Form 10-K regulatory filing explains that beginning in Oct. 2004, a number of putative securities fraud class action suits were filed in the Southern District of New York against AIG. These became the consolidated 2004 securities litigation.
The lead plaintiff in the litigation is a group of public retirement systems and pension funds benefiting Ohio state employees, suing on behalf of themselves and all purchasers of AIG’s publicly traded securities between Oct. 28, 1999 and April 1, 2005. Later, a separate, though similar, securities fraud action was also brought against AIG by Florida pension funds.
“As we said when we executed the term sheet for this settlement In July 2010, we are pleased to have resolved this long-standing lawsuit and welcome the court’s preliminary approval ruling,” AIG spokesman Mark Herr told Insurance Journal. “With this and other legacy matters behind us, we are better able to focus our efforts on taxpayers recouping their investment in AIG and restoring the value of our franchise for the benefit of all our stakeholders.”
The lead plaintiff alleged that from 1999 and 2005, AIG: concealed that it engaged in anti-competitive conduct through alleged payment of contingent commissions to brokers and participation in illegal bid-rigging; and concealed that it used “income smoothing” products and other techniques to inflate its earnings.
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