American International Group Inc. has agreed to pay $725 million to settle a long-running securities fraud lawsuit led by three Ohio public pension funds. This is one of the largest class action settlements in U.S. history. AIG, which is owned by 80% by the U.S. Government, will have to pay $175 million within the amount of days required of the preliminary court approval of the settlement. The other $550 million will be dispersed through other means such as a stock offering, cash, when it decides it’s commercially reasonable to make such an offering.
The litigation involved allegations that AIG engaged in accounting fraud, bid-rigging and stock price manipulation. AIG was bailed out in September 2008 from near-collapse with a $182.3 billion taxpayer-funded rescue package.
The suit was led by the Ohio Public Employees Retirement system, the State Teachers Retirement System of Ohio and the Ohio Police and Fire Pension Fund. The Ohio funds previously announced a $72 million settlement with General Reinsurance Corp, a $97.5 million settlement with PricewaterhouseCoopers LLP and a $115 million settlement with former AIG Chief Executer Hank Greenberg, other AIG executives and related corporate entities.