American International Group (AIG) appears to be cleaning up its image. Yesterday the global insurance giant settled a longstanding battle with US regulators, paying $1.64 billion to quash bid-rigging charges, and today the firm reached an agreement with the former heads of its private equity division, Peter Yu and William Jarosz, related to a lawsuit between the parties concerning a non-compete clause.
Yu and Jarosz had headed AIG Capital Partners, the firm’s private equity arm, until April 2005, when AIG cut the pair loose. Yu and Jarosz in the following months launched the emerging market-focused Cartesian Group, with a targeted fundraise as high as $750 million, according to reports.
AIG filed a lawsuit in February against the pair and others involved, saying that the new fund broke a non-compete clause. Other allegations included claims of computer fraud and breach of fiduciary duty.
Yu and Jarosz, however, launched the fund on the premise that they were fired without cause, obviating the non-compete clause between the two parties.
In a statement released today, AIG said it had resolved “all outstanding disputes” between the firm and the former employees.
The press release did not go into detail regarding the agreement, but did note, “Mr. Yu and Mr. Jarosz had previously claimed that they were owed money under their employment contracts and the settlement involves no payment of money to Mr. Yu and Mr. Jarosz.”
Further, the statement also included a statement from Yu and Jarosz saying, “We have determined after review of internal documents that our terminations were not retaliatory.”
For Cartesian, the settlement appears to free the firm from the non-compete shackles AIG had tried to enforce. David Golub, who served as legal counsel to Yu and Jarosz, told Reuters that the firm can now move ahead with its business.
Calls to AIG spokesman Joe Norton were not returned by press time.