Federal judge approves AIG settlement Addison Morris at 3:05 PM ET
[JURIST] A judge for the US District Court for the Southern District of New York [official website] on Wednesday approved the $115 million settlement between American International Group Inc. (AIG) [corporate website] shareholders and the company's former CEO and other executives in order to resolve allegations that the insurer misled investors about financial records. The class action lawsuit, brought in 2004, accused the defendants of conducting an illegal bid-rigging scheme, as well as making false statements about accounting issues that led to the company's restatement of earnings in 2005. The settlement money is intended to cover those who bought stock in the company between 1999 and 2005.
This settlement is the latest among many lawsuits that have been brought against AIG in recent years. In September 2010 a class-action case moved forward against former AIG chief executive Martin Sullivan, former executive for AIG's subsidiary Joseph Cassano and multiple other former chief and senior executives among accusations of fraudulent intent to mislead the market [JURIST report] and failing to disclose to its shareholders the risks the company was taking in issuing sub-prime mortgages. In May 2010 the US Department of Justice [official website] decided not to file charges [JURIST report] against Cassano, ending a two-year criminal investigation of several executives from AIG's Financial Products subsidiary, which played a large role in constructing complex contracts known as credit-default swaps [TIME backgrounder] that insured bond losses tied to the US housing market. The US Securities and Exchange Commission (SEC) [official website] investigation was undertaken to determine whether AIG officials deceived investors and auditors in 2007 by misrepresenting the accounting value of a credit default swap portfolio, which nearly bankrupted the company. In 2009, former AIG executives agreed to settle [JURIST report] a suit [complaint, PDF] brought by the SEC alleging their involvement in inflating the company's reported financial records.
Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible, ad-free format.