American International Group, the insurance giant has agreed to pay $725 million to three Ohio pension funds to settle claims of accounting fraud, stock manipulation and bid-rigging. The money will go to firefighters, teachers, librarians and other pensioners. Ohio’s attorney general, that it was the 10th largest securities class-action settlement in United States history. A.I.G.’s former chief executive, Maurice R. Greenberg, and other executives agreed to pay $115 million in an earlier settlement with Ohio, which filed its lawsuit in 2004.
The Ohio case was filed for pension funds for their significant losses in their holdings of A.I.G. when its share price plummeted.
The problems apparently began in the autumn of 2008, when a sudden downgrade in its creditworthiness after it was revealed that the company had sold questionable derivatives used to prop up the portfolios of other financial institutions.