US - General Re Corporation - a reinsurance unit of billionaire Warren Buffett's Berkshire Hathaway - has agreed to pay US$72m to settle investors' claims.
The Ohio attorney general's office is litigating the case on behalf of the Ohio Public Employees Retirement System, State Teachers Retirement System and Ohio Police and Fire Pension Fund and seeks damages for investors who purchased AIG securities between 28 October 1999 and 1 April 2005.
Gen Re is alleged to have participated in a fraudulent $500m reinsurance transaction with AIG that allowed AIG to improperly inflate its loss reserves - a key indicator of financial health to investors and insurance industry analysts.
"When the truth about this fraud and other AIG manipulations was made public, the price of AIG stock declined," said Ohio attorney general Richard Cordray. "Investors, including Ohio's pension funds, had been deceived and suffered significant financial losses."
The settlement must be approved by the United States District Court for the Southern District of New York in Manhattan.
The Ohio attorney general's office and the three Ohio pension funds are represented in the case by Labaton Sucharow and Hahn Loeser & Parks.
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