SEC Announces Start Of Distribution Process in AIG Settlement
The Securities and Exchange Commission on Monday the start of the process that will return more than $800 million in Fair Funds to harmed investors in American International Group, Inc., which settled SEC charges of financial fraud and improper financial reporting and disclosure over a four-year period.
The U.S. District Court for the Southern District of New York approved a distribution plan on April 14, 2008, for the Fair Fund created from financial penalties and disgorgement of ill-gotten gains that AIG paid in its 2006 settlement with the SEC. The court-appointed Distribution Agent, Kenneth R. Feinberg, will administer the distribution of the Fair Fund to eligible current and former shareholders of AIG.
"The court's approval of the AIG Distribution Plan is a significant advancement of the Commission's goal to return to eligible investors more than $800 million currently in the Fair Fund," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement.
The AIG distribution is expected to be completed by the beginning of 2009. The funds are on deposit in the court's registry earning interest. Potentially eligible claimants include:
* Any person or entity that purchased AIG common stock during the period Feb. 8, 2001, through and including March 31, 2005 who (1) sold at a loss on or after Feb. 14, 2005, and/or (2) held after March 31, 2005.
* Any person or entity who purchased certain AIG-affiliated fixed-income securities during the period Feb. 8, 2001, through and including March 31, 2005 who (1) sold on or after March 24, 2005, and/or (2) held after March 31, 2005.
The Sarbanes-Oxley Act of 2002 provided the SEC with authority to increase the amount of money returned to injured investors by allowing civil penalties to be included in Fair Fund distributions. Prior to SOX, only disgorgement could be returned to investors. Since 2002, SEC enforcement actions have resulted in the return of more than $3.7 billion to investors.
On Feb. 9, 2006, the Commission filed a complaint alleging that from at least 2000 until 2005, AIG materially falsified its financial statements through a variety of sham transactions and entities and that AIG reported materially false and misleading information about its financial condition. On Feb. 17, 2006, the court entered a final judgment against AIG, to which AIG consented without admitting or denying the allegations in the Complaint. Pursuant to the final judgment, AIG paid a total of $800 million on March 3, 2006 ($700 million in disgorgement and $100 million in penalties). On June 14, 2007, the court entered an order authorizing the Commission to establish a Fair Fund to include all of the funds paid by AIG.
Source: Source: SEC Press Release | Published on May 6, 2008
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