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By Paritosh Bansal and Steve Eder

NEW YORK, July 16 (Reuters) – American International Group Inc agreed to pay $725 the masses to settle a long-running securities fraud lawsuit led by three Ohio society pension funds, in one of the largest class action settlements in U.S. narrative.

AIG, which is nearly 80 percent owned by the U.S. control, would pay $175 million within 10 days of preliminary court approval of the installation with a class of AIG shareholders.

The company may fund the remaining $550 a thousand thousand through a stock offering or other means, including cash, when it decides it is commercially equitable to make such an offering.

The litigation, which began in October 2004, involved allegations that AIG engaged in accounting fraud, bid-rigging and stock price manipulation, said Ohio Attorney General Richard Cordray, who represented the Ohio funds.

The payment resolves allegations of AIG’s wide-ranging fraud from October 1999 to April 2005 and brings the expected restoration for AIG shareholders to about $1 billion, Cordray said.

AIG, which was bailed out in September 2008 from near-collapse with a $182.3 billion taxpayer-funded free package, said it was ‘pleased to have resolved this matter.’

‘This payment ends a long-standing lawsuit, allowing AIG to continue to point of concentration its efforts on paying back taxpayers and restoring the value of our franchise for the benefit of all our stakeholders,’ spokesman Mark Herr afore~.

The class action suit in Manhattan federal court was led through the Ohio Public Employees Retirement System, the State Teachers Retirement System of Ohio and the Ohio Police and Fire Pension Fund.

As apportionment of the overall case, the Ohio funds previously announced a $72 the masses settlement with General Reinsurance Corp, a $97.5 million settlement through PricewaterhouseCoopers LLP and a $115 million settlement with former AIG Chief Executive Maurice ‘Hank’ Greenberg, other AIG executives and kindred corporate entities.

Cordray said together this was the tenth-largest securities class action settlement in U.S. history.

It comes a day hind the U.S. Securities and Exchange Commission reached a $550 the great body of the people settlement in a case against Goldman Sachs Group Inc.

That form stemmed from Goldman’s marketing and packaging of a collateralized misdoing obligation that turned toxic during the financial crisis.

AIG’s shares closed downward 4.7 percent at $35.64 on the New York Stock Exchange.

(Reporting ~ means of Steve Eder and Paritosh Bansal; Editing by Robert MacMillan, Gary Hill) Keywords: AIG/

(paritosh.bansal@thomsonreuters.com +1 646 223 6113; Reuters Messaging: paritosh.bansal.reuters.com@reuters.unadulterated)

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