US - The American International Group has agreed to pay US$725m to settle a class action suit brought by three Ohio pension funds alleging bid-rigging, stock price manipulation and accounting fraud.
The suit was led by the Ohio Public Employees Retirement System, the State Teachers Retirement System of Ohio and the Ohio Police and Fire Pension funds.
Ohio attorney general Richard Cordray said AIG will make an initial payment of $175m while the remaining $550m could be funded through a common stock offering. Together with previous settlements, AIG will have doled out over $1bn to investors in Ohio, said Cordray.
Ohio Police and Fire executive director William Estabrook said: "We are pleased that after years of fighting for this principle the Attorney General was able to secure a monetary expression that the corporate behaviour at issue in this litigation is unacceptable and will not be tolerated."
AIG was accused of accounting fraud related to a $500m no-risk reinsurance transaction and other activities that resulted in a $3.9bn restatement in May 2005. The suit also alleged AIG participated in a bid-rigging scheme with insurance brokers and other insurance companies, and artificially inflated its stock price.
In February, the insurer agreed to pay $8m to settle a suit brought by the Oregon Public Employees Retirement System which accused the firm of poor disclosure and bid-rigging. (Global Pensions, February 26, 2010)
AIG nearly collapsed in 2008 and is now 80% owned by the US government.
An AIG spokesman said: "We are pleased to have resolved this matter. This settlement ends a long-standing lawsuit, allowing AIG to continue to focus its efforts on paying back taxpayers and restoring the value of our franchise for the benefit of all our stakeholders."
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