AIG Agrees $725 Million Settlement in Pension Funds Class Action

Washington, DC: A $725 million settlement has been agreed by American International Group, and the states of Florida and Ohio, in what is reportedly the tenth-largest securities class-action settlement in United States history. The settlement brings the total recovery for public pension funds to over $1 billion. The Attorney General for Ohio said this is the first and only billion-dollar class-action settlement since the financial crisis hit in 2008.

The lawsuit alleged bid-rigging and involved the Ohio Public Employees Retirement System, State Teachers Retirement System of Ohio, and Ohio Policy and Fire Pension Fund as the lead plaintiffs. They were joined later on by a group of Florida pension funds in a consolidated class-action suit.

The funds alleged that between Oct. 28, 1999 and April 1, 2005, AIG, current and former officers and directors of the company, C.V. Starr & Company, Starr International Company, General Reinsurance Corp., PricewaterhouseCoopers LLP, and others engaged in unethical conduct that led to a significant drop in the price of its stock. The groups were accused of engaging in "anti-competitive conduct through the alleged payment of contingent commissions to brokers and participation in illegal bid-rigging"; concealing practices to inflate earnings; selling insurance instruments to other companies designed to smooth income; and misleading investors about the scope of government investigations.

The settlement is still subject to court approval. No date has been set for the hearing, a spokeswoman at the Ohio Attorney General's Office said.

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Published on Jul-19-10