By Karen Freifeld
NEW YORK, Feb 7 (Reuters) - New York Attorney General Eric
Schneiderman is seeking to overturn a federal judge's decision
denying him the right to derail a $115 million settlement
between American International Group Inc shareholders and the
insurer's former chief executive.
Schneiderman filed a notice of appeal Wednesday in federal
court in Manhattan, saying he was taking the case to the 2nd
U.S. Circuit Court of Appeals.
U.S. District Court Judge Deborah Batts in Manhattan ruled
Jan. 7 that Schneiderman lacked standing to object to the
settlement and could not intervene in the case.
The settlement is intended to resolve claims of improper
accounting and other fraudulent practices at New York-based AIG
dating to 1999.
Schneiderman claims the deal is unfair and inadequate. He
says it doesn't account for market fallout from a 2000
transaction with General Re Corp, a unit of Warren Buffett's
Berkshire Hathaway Inc, which various government
investigators have said allowed AIG to inflate loss reserves by
$500 million without transferring risk.
Schneiderman argued a math error by the expert caused the
transaction to get no weight in the calculation of damages.
The transaction is part of a lawsuit the New York attorney
general's office brought against AIG former chief executive
Maurice "Hank" Greenberg and Howard Smith, AIG's former chief
financial officer, in 2005.
If the deal is approved, it would effectively end the New
York attorney general's case against Greenberg and Smith.
The "broad terms of the releases" would preclude New York
pursuing its case on behalf of AIG shareholders, Schneiderman
said in court papers.
Batts must approve the agreement between shareholders and
Greenberg, Smith, other executives, and Greenberg's companies
C.V. Starr & Co and Starr International Co.
The judge set a fairness hearing for April 10.
A spokeswoman for Boies, Schiller & Flexner, which
represents Greenberg and his companies, declined comment on the
Lawyers for the shareholders and Smith did not immediately
return calls for comment.
The case is In re American International Group Inc
Securities Litigation, U.S. District Court, Southern District of
New York, No. 04-08141.
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