American International Group Inc. (AIG) shareholders have received approval of a $970.5 million settlement resolving claims they were misled about its subprime mortgage exposure, leading to a liquidity crisis and $182.3 billion in federal bailouts. U.S. District Judge Laura Taylor Swain in Manhattan granted final approval at a hearing last month. This appears to be one of the largest class action settlements to come out of the 2008 financial crisis.
The U.S. Justice Department and U.S. Securities and Exchange Commission (SEC) had closed related investigations involving AIG in 2010. Judge Swain noted that no potential class member had objected to the terms of the settlement, which she said was strong evidence that it was “fair, reasonable and adequate” and should be approved. The settlement covers investors who bought AIG securities between March 16, 2006, and Sept. 16, 2008, when the company received its first bailout.
Investors led by the State of Michigan Retirement Systems, which oversees several state pension plans, accused AIG of failing to disclose the risks it took on through its portfolio of credit default swaps and a securities lending program. They said the failures led investors to buy stock and debt they otherwise would not have bought, resulting in billions of dollars in losses. A government rescue bail out in 2008 led taxpayers to take a nearly 80 percent stake in the New York-based insurer. The government has since sold off its stake in AIG, resulting in a positive return of $22.7 billion to the U.S. Treasury Department and Federal Reserve.
Source: Insurance Journal
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.