Former American International Group CEO Maurice “Hank” Greenberg and three other former executives with the insurer have reached a $115 million settlement with Ohio’s attorney general over allegations of anti-competitive practices.
Maurice "Hank" Greenberg
Ohio Attorney General Richard Cordray announced an agreement in principle with Greenberg, Howard I. Smith, Christian M. Milton and Michael J. Castelli, who were accused of using illegal practices, including market division through the use of undisclosed contingent commissions and bid-rigging. The four also were accused by Cordray’s office of a massive accounting fraud leading to a $3.9 billion restatement of AIG’s publicly available financial and regulatory findings.
Cordray said AIG could not be permitted “to defraud investors and other companies who play by the rules.”
“This agreement in principle will help compensate investors – including Ohio pension funds – who were harmed by AIG’s misconduct,” Cordray said in a statement.
Cordray said he is still preparing a class-action suit on behalf of the Ohio Public Employees Retirement System, State Teachers Retirement System of Ohio and Ohio Police and Fire Pension Fund, known collectively as the “Ohio Funds.”
He is seeking damages for investors who purchased AIG securities between Oct. 28, 1999, and April 1, 2005. Cordray said the Ohio Funds “have a fiduciary responsibility” to safeguard the pension investments of both members and retirees and will pursue litigation to preserve their investments if needed.
“My office has negotiated agreements totaling $284.5 million from secondary defendants in this case,” Cordray said. “Yet AIG itself has so far refused to do right by investors who were wronged. This is completely unacceptable in light of AIG’s request to receive hundreds of millions of dollars in bonus compensation, underwritten by taxpayers due to a federal bailout caused by AIG’s poor business decisions and the financial crises. Such misconduct simply underscores why my office will continue to hold Wall Street accountable for its wrongs.”
The agreement with the four former AIG executives requires the approval of the boards of the Ohio Funds, according to Cordray’s office. Other contingencies also must be met.
Earlier this month, Greenberg and Smith reached a $16.5 million settlement with the U.S. Securities and Exchange Commission over allegations of accounting violations. Greenberg will pay $15 million of that settlement himself and did not admit to any of the claims against him.
Greenberg, other ex-AIG executives settle Ohio allegations for $115M via IFAwebnews .