American International Group, 80 percent owned by the U.S. government, has announced it will pay out $725 million in a settlement of a securities fraud lawsuit, begun in 2004, that accused the insurance Gargantua of accounting fraud and stock manipulation. —JCL
American International Group Inc agreed to pay $725 million to settle a long-running securities fraud lawsuit led by three Ohio public pension funds, in one of the largest class action settlements in U.S. history.
AIG, which is nearly 80 percent owned by the U.S. government, would pay $175 million within 10 days of preliminary court approval of the settlement with a class of AIG shareholders.
The company may fund the remaining $550 million through a stock offering or other means, including cash, when it decides it is commercially reasonable to make such an offering.
The litigation, which began in October 2004, involved allegations that AIG engaged in accounting fraud, bid-rigging and stock price manipulation, said Ohio Attorney General Richard Cordray, who represented the Ohio funds.