Last month a judge approved a $115 million settlement in a shareholder lawsuit against former executives of insurance company American International Group Inc. The settlement was reached in September, just days before trial was to begin in a 2002 lawsuit challenging hundreds of millions of dollars in commissions paid by AIG to C.V. Starr & Co., a privately-held affiliate controlled by former AIG Chairman Hank Greenberg and other AIG directors. It was alleged that the Teachers Retirement System of Louisiana alleged that New York-based AIG could have done the work for which it paid Starr, and that the commissions were simply a mechanism for Greenberg and other Starr directors to line their pockets.
The settlement calls for $85.5 million to be paid by insurance carriers, with Starr responsible for $28.25 million. The remaining $1.25 million will be paid by former AIG Vice Chairman of Insurance Thomas Tizzio. The judge in his order described the settlement as fair and reasonable, noting that there was no assurance that the Plaintiffs could have recovered the amount they were seeking, which was up to $2 billion, if the case had gone to trial.
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