AG PETRO GETS IN ON AIG LAWSUIT

Ohio Attorney General Jim Petro is expanding the scope of the securities fraud class action lawsuit currently pending against American International Group and others by filing an amended complaint in federal court in New York.

The complaint is being filed on behalf of the Ohio funds that are the lead plaintiffs in the case–the Ohio Public Employees Retirement System, the State Teachers Retirement System of Ohio, and the Ohio Police & Fire Pension Fund.

The 200-page complaint expands previous allegations relating to AIG’s improper use of finite reinsurance, as well as other allegedly inappropriate transactions, that Petro said had the effect of illegally inflating the company’s earnings. Finite reinsurance is taking out an insurance policy to offset financial loss that a company incurs.

The lawsuit names several additional defendants, including Pricewaterhouse-Coopers, AIG’s longtime outside auditor; General Reinsurance Co., a Berkshire Hathaway subsidiary that arranged a $500 million finite reinsurance transaction with AIG in late 2000; Maurice “Hank” Greenberg, AIG’s former chairman and CEO; Starr International and C.V. Starr, two private companies that Greenberg controls; and several underwriters, including Merrill Lynch and Morgan Stanley, who led AIG bond offerings issued during the lawsuit’s five-year class period.

The case is currently pending before Judge Laura Taylor Swain in the U.S. District Court for the Southern District of New York in Manhattan. Judge Swain appointed the Ohio funds as lead plaintiff in February.

The lawsuit was originally filed in October 2004 after AIG was implicated in the New York attorney general’s investigation of illegal bid-rigging and other improprieties in the insurance industry.

Topics Lawsuits New York Ohio Reinsurance AIG