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A federal court has approved the $970.5 million settlement between American International Group Inc. (AIG) and its shareholders, bring about a resolution to a long-running case based in the sub-prime mortgage meltdown.
According to a Reuters report, U.S. District Judge Laura Taylor Swain in Manhattan granted final approval at a hearing on Friday afternoon. The case covered institutional investors that purchased AIG securities backed by problematic mortgages between March 16, 2006, and Sept. 16, 2008, when AIG’s first federal bailout occurred. The settlement covers investors who bought AIG securities between March 16, 2006, and Sept. 16, 2008, when the company received its first bailout. The bailout involved the government absorbing approximately 80 percent of AIG, which was later sold off at a $22.7 million profit.
Previous probes of AIG’s actions by the U.S. Department of Justice and U.S. Securities and Exchange Commission (SEC) were closed in 2010. This settlement is believed to be the largest shareholder class action settlement for a case that did not involve criminal or regulatory enforcement actions.