(Bloomberg) -- American International Group Inc. won courtapproval of a $970.5 million settlement with investors who accusedthe insurer at the onset of the financial crisis of misleading themabout risks tied to subprime mortgages.

The investors, urging a federal judge to approve the accord,called it one of the largest securities class action recoveriesstemming from the 2008 financial crisis.

AIG was sued that year by investors who said the New York-basedcompany misstated its exposure to the subprime mortgage marketthrough its securities lending program and its credit-default swapportfolio.

“It’s a great settlement and we are extremely gratified to havebeen able to achieve this result,” Jeffrey Golan, a lawyer for oneof the lead plaintiffs in the case, the State of MichiganRetirement Systems, said Friday in a phone interview.

AIG, bailed out by the U.S. government during the crisis, willpay $960 million while the accounting firm PricewaterhouseCoopersLLP will pay $10.5 million, according to a Manhattan federal courtfiling.

Lawyers for the lead plaintiffs on Friday also won approval ofalmost $116.5 million in legal fees, plus other litigationexpenses, according to court filings.

Claims Deadline

U.S. District Judge Laura Taylor Swain set a May 5 deadline forinvestors to submit claims under the agreement. More than 40,000already have been filed with the claims administrator in the case.The judge said at least 77 funds have opted out of the accord andmay now sue independently, according to the court.

“We are pleased that the settlement has been approved by thecourt and look forward to putting this litigation behind us,” JonDiat, an AIG spokesman, said in an e-mailed statement.

A separate related suit was filed by former employees whoclaimed AIG invested their retirement funds too heavily in thecompany’s own stock. That case is still pending. In 2012, AIGrepaid the bailout, which reached $182.3 billion.

The case is In Re American International Group Inc. 08-cv-05722,U.S. District Court, Southern District of New York (Manhattan).

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