NU Online News Service, Oct. 6, 11:17 a.m. EST

A federal court judge has preliminarily approved a $725 million settlement agreement announced more than a year ago to resolve a securities class-action lawsuit between American International Group Inc. (AIG) and Ohio and Florida public pension plan funds.

If the settlement gains final approval, the more than 7-year-old lawsuit over bid-rigging allegations would be put to rest.

The funds allege the actions of current and former officers of AIG and other companies—including former AIG chief executive Maurice “Hank” Greenberg's C.V. Starr & Co.—engaged in unethical conduct that plummeted AIG's stock price.

The journey to final settlement approval marks another attempt by AIG to put its past behind it.

“With this and other legacy matters behind us, we are better able to focus our efforts on taxpayers recouping their investment in AIG and restoring the value of our franchise for the benefit of our stakeholders,” says AIG spokesman Mark Herr in an email.

AIG is also working to gain final approval of a $450 million settlement with insurers in a case involving AIG's alleged underreporting of premiums to a workers' compensation program. AIG has alleged the same against the insurers suing it.

The preliminary approval order of the $725 million settlement signed by District Court Judge Deborah A. Batts in the Southern District of New York says the settlement class is made up of all people and entities who acquired AIG securities from Oct. 28, 1999 through April 1, 2005, as well as stockholders of HSB Group and American General Corp. at the time they was acquired by AIG.

A “fairness hearing” is scheduled for Jan. 31, 2012 to determine whether the proposed settlement is fair, reasonable and adequate—and in the best interest of the class.

In August 2009, Greenberg, along with some other former AIG executives, C.V. Starr and Starr International, reached a $115 million settlement with the Ohio plaintiffs.

The plaintiffs have also obtained a $72 million settlement with General Reinsurance and $97.5 million from PricewaterhouseCoopers.

The groups were accused of engaging in anti-competitive conduct through the alleged payment of contingent commissions to brokers and participation in illegal bid-rigging. AIG and others were also accused of inflating earnings and misleading investors about government investigations.

Special Reports /

AIG $725M Securities Settlement Gains Preliminary Approval

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