An Oregon Department of Justice press release said the lawsuit accused AIG of a pattern of poor disclosure and bid-rigging, as well as securities fraud. The suit was filed by the State Treasurer’s Office and Public Employee Retirement System Board.
AIG’s actions caused the pension fund to lose about $15 million because shares of the company were inflated in value between 2000 and 2005 – caused because the company repeatedly failed to disclose unethical and improper activities, including a bid-rigging scheme with other insurers, the lawsuit said.
The announcement pointed out that AIG was one of the major players internationally in the proliferation of credit default swaps, a debt accounting maneuver that has been cited as a catalyst for the market collapse of 2008 and 2009. The company was found to have employed more of the credit default swaps than it could pay for, and to have failed to properly account for that debt in regulatory filings.
The value of AIG stock declined repeatedly after the corporate behavior was found, and after the company corrected corporate disclosure documents.
AIG did not admit to any wrongdoing as part of the settlement.
Pension funds in Ohio are also seeking to recover losses from AIG investments (see Ohio Pension Funds to Lead Class Action against AIG).