UPDATE:Greenberg,Former Executives To Settle AIG Holder Suit-Source
13 August 2009 - 7:42AM
Dow Jones News
Maurice R. "Hank" Greenberg, American International Group Inc.'s
(AIG) former chief executive, and a group of former AIG executives
have agreed to pay $115 million to settle a shareholder lawsuit
over alleged false statements regarding the insurer's financial
results.
The settlement by Greenberg and other executives is in a
consolidated shareholder action brought by a group of Ohio pension
funds in U.S. District Court in Manhattan, a person familiar with
the matter said.
The agreement is contingent in part on approval of the case as a
class action. U.S. District Judge Deborah A. Batts in Manhattan is
having a two-day hearing beginning Thursday on whether to grant
class-action status, which is contested.
The settling defendants are: Greenberg, Howard Smith, AIG's
former chief financial officer; Christian Milton, AIG's former vice
president of reinsurance; Michael J. Castelli, AIG's former
controller; and two AIG sister companies controlled by Greenberg,
C.V. Starr and Starr International Co., the person said.
The lead plaintiffs are the Ohio Public Employees Retirement
System, the State Teachers Retirement System of Ohio and the Ohio
Police & Fire Pension Fund.
A spokesman for the Ohio Attorney General, which brought the
case on behalf of the Ohio funds, declined comment Wednesday.
A spokeswoman for Greenberg and the Starr companies didn't
immediately have a comment when reached Wednesday.
Lawyers for Smith and Milton didn't immediately return phone
calls seeking comment. A lawyer for Castelli referred calls to one
of Greenberg's lawyers.
In February, General Re Corp., a unit of Warren Buffett's
Berkshire Hathaway Inc. (BRKA, BRKB), agreed to pay $72 million to
settle claims against it in the case.
AIG remains a defendant in the case. An AIG spokesman declined
comment Wednesday.
The agreement follows a settlement by Greenberg and Smith last
week with the U.S. Securities and Exchange Commission, in which
neither man admitted or denied wrongdoing. Greenberg agreed to pay
$15 million in the SEC action, while Smith agreed to pay $1.5
million.
Greenberg resigned as AIG's top executive in March 2005 amid
probes into the insurer's accounting.
In 2005, AIG said it would restate more than four years of its
earnings. It also said at the time, without naming Greenberg
directly, that former executives at times were able to "circumvent
internal controls over financial reporting."
In 2006, AIG agreed to pay more than $1.6 billion to settle
accounting fraud allegations by the New York attorney general's
office and the Securities and Exchange Commission.
New York Attorney General Andrew Cuomo is still pursuing a case
against Greenberg and Smith.
-By Chad Bray, Dow Jones Newswires; 212-227-2017;
chad.bray@dowjones.com