AIG agrees to massive $725m fraud payout

The US
insurance giant AIG has agreed to pay $725m to settle a long-running fraud case
against it.

The
settlement is likely to be one of the biggest in US history, following a class
action lawsuit led by three Ohio pension funds.

They
alleged that AIG had engaged in stock price manipulation, anti-competitive
behaviour and accounting fraud between 1999 and 2005.

That,
they say, resulted in shareholders losing millions.

The
court now needs to give its approval before payments can be made.

A first
payment of $175m is scheduled within days of the court’s approval, however,
while AIG is expected to raise the further $550m though the issuing of new
shares.

AIG is
now 80% owned by the US government following a massive bailout of the company
at the height of the financial crisis.

Ohio
Attorney General Richard Cordray, who represented the Ohio funds, said total
payouts from AIG to shareholders would now total $1bn, including previous
settlements.

AIG said
it was “pleased to have resolved this matter”, adding that it could
now focus on paying back taxpayers the $182bn used to rescue it.

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