AIG wins court approval of $970.5M settlement with investors

(Bloomberg) — American International Group Inc. won court approval of a $970.5 million settlement with investors who accused the insurer at the onset of the financial crisis of misleading them about risks tied to subprime mortgages.

The investors, urging a federal judge to approve the accord, called it one of the largest securities class action recoveries stemming from the 2008 financial crisis.

AIG was sued that year by investors who said the New York-based company misstated its exposure to the subprime mortgage market through its securities lending program and its credit-default swap portfolio.

“It’s a great settlement and we are extremely gratified to have been able to achieve this result,” Jeffrey Golan, a lawyer for one of the lead plaintiffs in the case, the State of Michigan Retirement Systems, said Friday in a phone interview.

AIG, bailed out by the U.S. government during the crisis, will pay $960 million while the accounting firm PricewaterhouseCoopers LLP will pay $10.5 million, according to a Manhattan federal court filing.

Lawyers for the lead plaintiffs on Friday also won approval of almost $116.5 million in legal fees, plus other litigation expenses, according to court filings.