Ohio Attorney General Jim Petro is expanding the scope of the securities fraud class action lawsuit currently pending against American International Group (“AIG”) and others by filing an amended complaint in federal court in New York.
The complaint is being filed on behalf of the Ohio funds that are the lead plaintiffs in the case – the Ohio Public Employees Retirement System, the State Teachers Retirement System of Ohio, and the Ohio Police & Fire Pension Fund.
“Today we have taken several necessary steps to protect the interests of all shareholders and bondholders who were injured by AIG and the other defendants’ misconduct,” Petro said. “My office intends to vigorously and effectively represent the class of investors, including public pension funds from all states, with as much transparency as possible for everyone.”
The 200-page complaint expands previous allegations relating to AIG’s improper use of so-called “finite” reinsurance, as well as other inappropriate transactions, that had the effect of illegally inflating the company’s earnings. “Finite” reinsurance is taking out an insurance policy to offset financial loss that a company incurs.
The lawsuit names several additional defendants, including PricewaterhouseCoopers, AIG’s long-time outside auditor; General Reinsurance Co., a Berkshire Hathaway subsidiary that arranged a $500 million “finite” reinsurance transaction with AIG in late 2000; Maurice “Hank” Greenberg, AIG’s former chairman and CEO; Starr International and C.V. Starr, two private companies that Greenberg controls; and several underwriters, including Merrill Lynch and Morgan Stanley, who led AIG bond offerings issued during the lawsuit’s five-year class period.
The case is currently pending before Judge Laura Taylor Swain in the U.S. District Court for the Southern District of New York in Manhattan. Judge Swain appointed the Ohio funds as lead plaintiff in February. The lawsuit was originally filed in October 2004 after AIG was implicated in the New York attorney general’s investigation of illegal bid-rigging and other improprieties in the insurance industry.
Petro has retained Hahn Loeser & Parks LLP, who has associated with Goodkind Labaton Rudoff & Sucharow LLP of New York, to assist him in representing the Ohio funds.
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