American International Group (AIG) has reached a $960m settlement to resolve a shareholder lawsuit that was launched following the firm’s collapse during the financial crisis, accusing the company for misleading investors about its financial condition from 2006 to 2008.
The shareholders, demanding over $100bn in compensation, filed the class action suit in 2008 in the US District Court for the Southern District of New York, when the US insurer was saved by the US Treasury and Federal Reserve that eventually became a $182bn bailout to AIG.
Shareholders led by the state of Michigan claimed they "suffered tens of billions of dollars of losses, at the least, based on false and materially misleading statements that AIG, certain of its executives, directors, underwriters and outside auditor made concerning the company’s financial results, business operations and condition", reported The Financial Times.
Subject to federal-court approval, the settlement will resolve more than a half-dozen separate class-action complaints filed in the wake of AIG’s near collapse in September 2008.
An AIG spokesman said: "The resolution of this and other legacy financial-crisis-related matters better enables us to focus on AIG’s future."
The proposed class-action settlement was revealed in the insurance conglomerate’s second-quarter earnings filing with the US Securities and Exchange Commission (SEC).
However, the latest settlement will not put an end to legal issues. The company still faces nine separate securities lawsuits from various parties, including the Kuwait Investment Authority, Illinois’s teachers’ retirement system and various mutual funds, according to AIG’s year-end financial filings.
Image: AIG Building on 175 Water Street, New York City. Photo: courtesy of AIG.