AIG hit by Michigan pension fund lawsuit
World’s largest insurer AIG is being sued by the State of Michigan for $30mn in losses on its pension fund resulting from the company’s stock falling on allegations that it aided accounting fraud by other companies, and its involvement in the Spitzer probe over contingent commissions.
The state’s $48bn public pension fund is the 13th largest in the US, and attorney general Mike Cox commented: “Michigan employees work hard for their pensions, and I will not allow these Michigan workers to lose their hard-earned dollars because of fraudulent behaviour."
Michigan State reportedly wants to take the lead in a New York filed class-action lawsuit.
The action was spurred after the insurer’s stock plunged 23 percent in the wake of news breaking of AIG’s alleged involvement in bid rigging and earnings manipulation, together with criticism over statements made in relation to government investigations into so-called off-balance-sheet transactions.
AIG reached a $126mn settlement with the Securities and Exchange Commissions and US Department of Justice at the end of November over off-balance-sheet transactions set up on behalf of mobile telecoms company Brightpoint and the PNC Financial Services Group (see Insider Week 151).
The settlement consisted of an $80mn penalty to be paid to the DOJ in relation to the Brightpoint and PNC deals, and $46mn in fees, plus interest, to be paid into an SEC disgorgement fund for the PNC transactions.
State treasurer Jay Rising said: “Companies and corporations we invest in, on behalf of hardworking employees and retirees, must be held legally responsible for their conduct.”