A federal judge on Wednesday approved a $115 million settlementbetween American International Group Inc. shareholders and formerCEO Maurice “Hank” Greenberg and other defendants over allegedimproper accounting at the insurance giant.
|The accord is the latest in a string of settlements to spill outof class-action securities-fraud litigation tied to practices atthe insurer dating to 1999. In total, $937.5 million in settlementshave been approved with defendants, including AIG.
|U.S. District Judge Deborah Batts in Manhattan gave finalapproval to the pact at a court hearing, calling it “fair,reasonable and adequate.”
|“Defendants are pleased that all those claims have beenresolved,” Robert Dwyer, a lawyer for Greenberg at Boies, Schiller& Flexner, said in a statement.
|Batts approved a $725 million settlement with AIG in February2012. She earlier approved a $97.5 million accord with accountingfirm PricewaterhouseCoopers.
|In August, a federal appeals court reversed a decision by Battsrejecting preliminary approval of a fourth settlement for $72million with General Re, a unit of Warren Buffett's BerkshireHathaway Inc.
|LONG-RUNNING LAWSUIT
|The settlement with Greenberg and the other defendants resolvesa 2004 lawsuit accusing the defendants of misleading investors inconnection with an alleged illegal bid-rigging scheme in theinsurance industry.
|The lawsuit also accused Greenberg and others of making falseand misleading statements about an alleged accounting fraud thatresulted in a $3.9 billion restatement by AIG in 2005.
|AIG separately paid $1.6 billion to settle various regulatoryinvestigations of the accounting fraud, and Greenbergand formerChief Financial Officer Howard Smith paid $16.5 million to settleclaims by the U.S. Securities and Exchange Commission.
|The alleged activities took place well before AIG accepted $182billion in taxpayer bailouts during the financial crisis in 2008and 2009.
|Among those participating in the $115 million settlementareGreenberg, Smith, two other executives and two of Greenberg'scompanies, C.V. Starr & Co and Starr International Co.
|Two Ohio state pension funds acted as lead plaintiffs for theclass, which covers AIG shareholders who bought stock from October1999 to April 2005.
|Batts also approved awarding 13.25 percent of the settlement, or$15.24 million, as attorneys fees to plaintiffs' lawyers led by thelaw firms Labaton Sucharow and Hahn Loeser & Parks.
|Thomas Dubbs, a lawyer at Labaton, did not respond to a requestfor comment.
|IMPACT ON NEW YORK LAWSUIT
|Dwyer, Greenberg's lawyer, said in his statement that thesettlement also “effectively extinguishes all damages claims”asserted in a separate civil fraud lawsuit being pursued by NewYork Attorney General Eric Schneiderman.
|The lawsuit, filed in 2005, seeks more than $6 billion indamages and centers on two allegedly fraudulent reinsurancetransactions in 1999 and 2000.
|Schneiderman had sought to object to the settlement, but Battssaid in January he did not have standing. Schneiderman has filed anotice of appeal.
|Damien LaVera, a spokesman for Schneiderman, said regardless theoutcome of the settlement, “our office intends to continue topursue this case.”
|An AIG spokesman declined to comment on the settlement.
|The case is In re American International Group Inc SecuritiesLitigation, U.S. District Court, Southern District ofNew York, No.04-08141.
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