Saturday, August 15, 2009

Former AIG chief, others settle suit for $115 million

COLUMBUS, Ohio — Former American International Group Inc. CEO Maurice "Hank" Greenberg and others have agreed to pay $115 million to settle fraud claims in a lawsuit filed on behalf of three Ohio state pension funds and shareholders across the country.
State Attorney General Richard Cordray announced the agreement late Thursday, the third such settlement from the lawsuit for a total of $284.5 million.

Cordray said Friday that the Ohio share of the settlement wasn't known and would depend on how many parties join the
class action.

The agreement must be approved by a federal court in New York and the boards of the Ohio Public Employees Retirement System, the State Teachers Retirement System and the Ohio Police & Fire Pension Fund.

Greenberg was forced out of AIG after charges that the company had engaged in deceptive accounting practices surfaced.

Greenberg could not be reached for comment Friday. A message seeking comment was left for his attorney, Bertil Lundqvist, in New York.

In addition to the settlement monies, Cordray said the goal of the legal action with Ohio as the lead plaintiff was to challenge Wall Street fraud. "We think accountability is important. We think it's necessary to establish that, so going forward these kinds of things won't happen again," he said.

"What we do here is set precedent, so if people engage in the same kind of misconduct they will be held responsible."

The lawsuit sought damages for investors who bought AIG securities between Oct. 28, 1999, and April 1, 2005.

Last week the Securities and Exchange Commission announced that Greenberg had agreed to pay a $15 million fine to settle fraud charges tied to an accounting scandal earlier this decade at AIG that led to Greenberg's ouster in 2005. The following year, AIG paid more than $1.6 billion to settle charges of improper accounting.

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