* Resolves shareholder case against former CEO Greenberg,
* Judge calls accord 'fair, reasonable and adequate'
* AIG's $725 mln settlement to resolve claims approved in
By Nate Raymond
NEW YORK, April 10 A federal judge on Wednesday
approved a $115 million settlement between American
International Group Inc shareholders and former CEO
Maurice "Hank" Greenberg and other defendants over alleged
improper accounting at the insurance giant.
The accord is the latest in a string of settlements to spill
out of class-action securities fraud litigation tied to
practices at the insurer dating to 1999. In total, $937.5
million in settlements have been approved with defendants,
U.S. District Judge Deborah Batts in Manhattan gave final
approval to the pact at a court hearing, calling it "fair,
reasonable and adequate."
"Defendants are pleased that all those claims have been
resolved," Robert Dwyer, a lawyer for Greenberg at Boies,
Schiller & Flexner, said in a statement.
Batts approved a $725 million settlement with AIG in
February 2012. She earlier approved a $97.5 million accord with
accounting firm PricewaterhouseCoopers.
In August, a federal appeals court reversed a decision by
Batts rejecting preliminary approval of a fourth settlement for
$72 million with General Re, a unit of Warren Buffett's
Berkshire Hathaway Inc.
The settlement with Greenberg and the other defendants
resolves a 2004 lawsuit accusing the defendants of misleading
investors in connection with an alleged illegal bid-rigging
scheme in the insurance industry.
The lawsuit also accused Greenberg and others of making
false and misleading statements about an alleged accounting
fraud that resulted in a $3.9 billion restatement by AIG in
AIG separately paid $1.6 billion to settle various
regulatory investigations of the accounting fraud, and Greenberg
and former Chief Financial Officer Howard Smith paid $16.5
million to settle claims by the U.S. Securities and Exchange
The alleged activities took place well before AIG accepted
$182 billion in taxpayer bailouts during the financial crisis in
2008 and 2009.
Among those participating in the $115 million settlement are
Greenberg, Smith, two other executives and two of Greenberg's
companies, C.V. Starr & Co and Starr International Co.
Two Ohio state pension funds acted as lead plaintiffs for
the class, which covers AIG shareholders who bought stock from
October 1999 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 the law firms Labaton Sucharow and Hahn Loeser &
Thomas Dubbs, a lawyer at Labaton, did not respond to a
request for comment.
IMPACT ON NEW YORK LAWSUIT
Dwyer, Greenberg's lawyer, said in his statement that the
settlement also "effectively extinguishes all damages claims"
asserted in a separate civil fraud lawsuit being pursued by New
York Attorney General Eric Schneiderman.
The lawsuit, filed in 2005, seeks more than $6 billion in
damages and centers on two allegedly fraudulent reinsurance
transactions in 1999 and 2000.
Schneiderman had sought to object to the settlement, but
Batts said in January he did not have standing. Schneiderman has
filed a notice of appeal.
Damien LaVera, a spokesman for Schneiderman, said regardless
the outcome of the settlement, "our office intends to continue
to pursue this case."
An AIG spokesman declined to comment on the settlement.
The case is In re American International Group Inc
Securities Litigation, U.S. District Court, Southern District of
New York, No. 04-08141.