PNC Settles Class Suit for $30M
NU Online News Service, Nov. 22, 12:20 p.m. EST?PNC Financial has agreed to a $30 million settlement to resolve a class action investor lawsuit that accused the company of using improper insurance contracts to hedge against volatile earnings, according to terms of a settlement announced on Tuesday.[@@]
Insurers for PNC will place the money in a settlement fund while American International Group Inc. will pay an additional $4 million to the fund.
AIG was alleged to have improperly sold insurance contracts to two companies, PNC and Brightpoint Inc., to help them smooth earnings volatility from quarter to quarter.
The insurance giant agreed to pay $46 million last month in an accord with the Securities and Exchange Commission to settle allegations of civil securities fraud over 2001 transactions it made with PNC that allegedly helped the regional bank artificially inflate its earnings.
The federal investigation of AIG's dealings with PNC involved three 2001 transactions in which the Pittsburgh-based bank increased its earnings by shifting $762 million of poorly performing loans and other assets off its balance sheets, allegedly in violation of generally accepted accounting principles.
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