PricewaterhouseCoopers US (PwC) has agreed to pay $97.5 million
to the State of Ohio to settle investors’ claims in securities
litigation against insurance company American International Group
(AIG).

According to the office of the Attorney General for Ohio, this
represents one of the ten highest settlements paid by an accounting
firm in a securities fraud class action in the US.

The class action is on behalf of three plaintiffs – the Ohio
Public Employees Retirement System, State Teachers Retirement
System and Ohio Police and Fire Pension Fund – who are seeking
damages for investors who purchased AIG securities between 28
October 1999 and 1 April 2005.

The claims are based on AIG’s alleged involvement in a market
division scheme with others in the insurance industry, which was
disclosed in October 2004. The case also includes AIG’s improper
accounting for reinsurance and other transactions, which led to the
company’s $3.9 billion restatement or adjustment of earnings in May
2005.

These accounting issues led to the dismissal of AIG’s then
chairman and chief executive Maurice Greenberg as well as several
other senior executives.

PwC, which continues to serve as AIG’s independent auditor, was
alleged to have violated the securities laws in connection with its
audit services and issuance of unqualified audit opinions on AIG’s
financial statements during the years at issue in the case.

The settlement must now be approved by the United States
District Court for the Southern District of New York.

Commenting on the settlement, the firm said in a statement: “We
have decided to settle the case at this stage to avoid the enormous
litigation costs that would be incurred if the case continued
against the firm, while at the same time eliminating any potential
exposure.

“The settlement does not contain an admission of wrongdoing by
the firm and we continue to believe that our work was in accordance
with professional standards.”

The principal assistant of the Ohio Attorney General, Chris
Geidner, said the settlement represents a tremendous result for
investors.

“We are pleased with this milestone and will continue to
vigorously pursue investors’ claims against the remaining
defendants in the case,” Geidner said.