Lawyers for American International Group Inc shareholders argued that the attorney general for New York should not postpone a $115 million settlement between them and the former chief executive of the insurer. The settlement was agreed upon in 2009 and Eric Schneiderman asked U.S. District Judge Deborah Batts to reject the settlement in August. He said that an error occurred in the math that caused the settlement to be too low. Lawyers for the shareholders said that the error did not cause problems with the payout.
The former CEO of AIG involved in the settlement is Maurice Greenberg and the former Chief Financial Officer is Howard Smith. The companies involved in the case are Greenberg’s C.V. Starr & Co and Starr International Co.
“The court should not put the $115 million Starr settlement at risk so that the New York attorney general can continue to pursue ‘billions’ of dollars from Greenberg and Smith,” the lawyers said in the filing.
The issue in the case stems from a transaction in 2000 with General Re Corp, a segment of Warren Buffet’s Berkshire Hathaway Inc. According to investigators, the transaction permitted AIG to inflate its loss reserves by $500 million without transferring any risk involved.
Schneiderman said that the math error occurred at the hand of John Finnerty, who was hired by the plaintiffs in the case. Jane Nettesheim, an expert used by Schneiderman, said that she calculated $6.56 billion of damages.