AIG settles Oregon's securities lawsuit
John Kroger (D)
Ben Westlund (D)
SALEM, Ore. (Legal Newsline)- U.S. insurance giant American International Group Inc. has agreed to return $8 million to the Oregon Public Employee Retirement Fund to settle fraud claims by the state attorney general, officials said Thursday.
Oregon Attorney General John Kroger had alleged in a securities lawsuit that the New York-based insurer had engaged in a bid-rigging scheme with other insurance companies and made poor disclosures to the pension fund about the company's debt load.
The attorney general's lawsuit alleged that AIG's wrongdoing cost the pension fund to lose about $15 million because shares of the company were artificially inflated between 2000 and 2005.
Among other actions, AIG used more credit default swaps than they could pay for, and failed to properly account for the debt in its regulatory filings.
"We will take decisive against Wall Street when they violate the law," said Kroger, a Democrat and former federal prosecutor in New York.
In settling the case, AIG has not admitted to any wrongdoing. The company plans to pay the state next month, the attorney general's office said.
The Oregon Public Employee Retirement Fund had a value of $51.5 billion as of Jan. 31. It has about 320,000 working and retired members.
"We go to great lengths to protect Oregonians and their public investments," said state Treasurer Ben Westlund, who announced the settlement along with Kroger.
The AIG case is not the first instance of Kroger and Westlund, a fellow Democrat, joining forces against alleged Wall Street malfeasance.
The two took action last year against OppenheimerFunds Inc., manager of Oregon's college savings plan.
The company agreed to a $20 million settlement over losses Oregon College Savings Plan participants suffered after the company invested funds in risky securities.
From Legal Newsline: Reach staff reporter Chris Rizo at email@example.com.