A New York federal court judge has given a preliminary approval to American International Group’s $725 million settlement with Ohio public pension funds. This is another positive step in AIG’s effort to resolve ongoing legal disputes with investors in the consolidated 2004 securities litigation. AIG and the parties involved in the lawsuit agreed to the settlement in July 2010. The next step will be a “fairness hearing,” scheduled for Jan. 31, 2012. It will determine at that hearing whether the proposed settlement is fair and reasonable. The court will then determine whether to give final approval to the settlement.
The settlement involves the consolidated 2004 securities litigation. Beginning in Oct. 2004, a number of putative securities fraud class action suits were filed in the Southern District of New York against AIG. These became the consolidated 2004 securities litigation. The lead Plaintiff in the litigation is a group of public retirement systems and pension funds benefiting Ohio state employees, suing on behalf of themselves and all purchasers of AIG’s publicly-traded securities between Oct. 28, 1999 and April 1, 2005. A separate, though similar, securities fraud action was also filed against AIG by Florida pension funds. The lead Plaintiff alleged that between 1999 and 2005, AIG:
• concealed that it engaged in anti-competitive conduct through alleged payment of contingent commissions to brokers and participation in illegal bid-rigging; and
• concealed that it used “income smoothing” products and other techniques to inflate its earnings.
I am not sure there is any opposition to this settlement. At press time, I had not heard of any. But we will continue to monitor the case to see if any opposition develops.
It appears to be a good settlement.
Source: Insurance Journal
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