NEW YORK (Reuters) - A federal judge on Wednesday approved a $115 million settlement between American International Group Inc (AIG.N) 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, including AIG.
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 PWC.UL.
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(BRKa.N).
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 2005.
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 Commission.
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 & Parks.
Thomas Dubbs, a lawyer at Labaton, did not respond to a request for comment.
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.
Reporting by Nate Raymond in New York; Editing by Martha Graybow, Matthew Lewis and Dan Grebler