Richard Cordray (D)
COLUMBUS, Ohio (Legal Newsline) - Maurice "Hank" Greenberg, American International Group Inc.'s former chief executive, and a group of former AIG executives have agreed to pay $115 million to settle a lawsuit filed by Ohio Attorney General Richard Cordray, the Democrat said.
The attorney general's shareholder's lawsuit alleged that the executives made false statements regarding the company's financial health.
"AIG cannot be permitted to defraud investors and other companies who play by the rules. This agreement in principle will help compensate investors - including Ohio pension funds - who were harmed by AIG's misconduct," Cordray said in a statement.
The attorney general's case alleges anti-competitive practices, such as market division through the use of undisclosed contingent commissions and bid-rigging, as well as allegations of a massive accounting fraud that led to a $3.9 billion restatement of AIG's publicly available financial and regulatory filings.
The lawsuit was filed on behalf of the Ohio Public Employees Retirement System, State Teachers Retirement System of Ohio and Ohio Police and Fire Pension Fund.
The complaint seeks damages for investors who purchased AIG securities between Oct. 28, 1999, and April 1, 2005.
The attorney general's agreement with the executives is contingent on approval of the deal by the boards of the Ohio retirement funds.
Cordray said he will now prepare the case for trial against the primary defendant, AIG.
"My office has negotiated agreements totaling $284.5 million from secondary defendants in this case. Yet AIG itself has so far refused to do right by investors who were wronged. This is completely unacceptable in light of AIG's request to receive hundreds of millions of dollars in bonus compensation, underwritten by taxpayers due to a federal bailout caused by AIG's poor business decisions and the financial crises. Such misconduct simply underscores why my office will continue to hold Wall Street accountable for its wrongs," Cordray said.
AIG agreed in 2006 to pay more than $1.6 billion to settle accounting fraud allegations by the New York attorney general's office and the U.S. Securities and Exchange Commission.
From Legal Newsline: Reach staff reporter Chris Rizo at email@example.com.