AIG Class Action Approved for Ohio Plans; $150 Million SEC-BofA Settlement OK'ed

(February 24, 2010) — In a lawsuit against American International Group (AIG), three Ohio retirement systems have been granted class-action certification.

According to the report, the systems allege they suffered billions of dollars in losses due to accounting fraud and other securities law violations committed by the insurance giant.

The three funds and lead plaintiffs — the $69 billion Ohio Public Employees Retirement System, $62.9 billion Ohio State Teachers Retirement System and $10 billion Ohio Police and Fire Pension Fund – initially filed the suit against AIG on October 15, 2004. The lawsuit is seeking damages for investors who bought AIG securities between October 28, 1999, and April 1, 2005.

U.S. District Court Judge Deborah Batts of the southern District of New York granted the class-action status against AIG for equity shareholders but excluded bondholders.

According to the AP, Maurice “Hank” Greenberg, former AIG chief executive officer and board chairman, agreed in August to pay $115 million to settle fraud claims as part of the lawsuit.

“Although we continue to believe that no class should be certified, we are pleased that the court refused to certify any bondholder claims and significantly limited the equity holder claims,” said AIG officials in a statement. “AIG already has paid $800 million to an SEC fair fund to compensate its investors, including those that are part of the alleged class in this lawsuit — more than what all the other defendants have agreed to pay combined.”

In other news, a US judge has approved a $150 million settlement between Bank of America and the Securities and Exchange Commission over changes that the bank neglected to disclose material information about its acquisition of Merrill Lynch. BofA currently faces a class action lawsuit from Richard Cordray, Ohio attorney general, who filed a complaint on behalf of five pension funds against the bank.

“We welcome Judge Rakoff’s ruling today, which recognizes that Bank of America failed to adequately disclose to its shareholders material information related to the Bank’s acquisition of Merrill Lynch,” said Ohio’s Cordray to Global Pensions. Today’s decision validates and reinforces the core allegations of our lawsuit against Bank of America.”