Big Four firm PricewaterhouseCoopers has agreed to pay three Ohio pension funds $97.5 million to settle its part of a securities class action filed against American International Group (AIG).
The settlement stems from a suit filed against AIG in 2004 by three Columbus-based pension funds: the Ohio Public Employees Retirement System, the State Teachers Retirement System of Ohio, and the Ohio Police & Fire Pension Fund. The pension funds wanted damages for shares bought between October 1999 and April 2005. AIG was forced to restate earnings by almost $4 billion in 2005 after an investigation by the SEC and former New York State Attorney General Eliot Spitzer, which led to ouster of CEO Maurice "Hank" Greenberg.
The pension funds contend that PwC violated securities laws in its audits of AIG's financial statements during those years.
"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," said a PwC spokeswoman in a statement to The Am Law Daily.
The payout is one of the 10 highest to be paid by an accounting firm to settle a securities fraud class action, Chris Geidner, Ohio's principal assistant attorney general, told the Guardian. "Auditors are not 'non-speaking actors' and they have to issue opinion letters which are part of a company's SEC filings," he said.
The PwC settlement must be approved by U.S. District Court Judge John Sprizzo in Manhattan. PwC continues to serve as AIG's independent auditor.
The case is not related to AIG's $122.8 billion bailout by the federal government.