A US law firm has advertised this week for US investors who lost money on the Allfirst scandal to come forward and claim their part of a $2.5 million (€1.98 million) settlement of a class action suit that arose from the $691 million John Rusnak trading scandal.
The case was taken against AIB, Allfirst and seven former Allfirst directors and officers, including Rusnak.
Legal experts say the settlement amount is so low because AIB shares shot back up in value soon after the scandal was discovered, based on rumours of a possible takeover of AIB by Royal Bank of Scotland.
The settlement only applies to US holders of American Depository Shares (ADSs), which are securities offered by non-US companies who want to list on an American exchange. Each AIB ADS can be converted to the company's regular shares.
The law firm taking the class action, Finkelstein, Thompson & Loughran, is calling on US ADS holders to come forward and claim their part of the settlement.
However, New York federal district judge, Deborah A Batts, is to hold a hearing in July to assess if the terms of the settlement are "fair, reasonable and adequate" as required by US law.
Investors wishing to claim on the fund must have held AIB ADSs between February 6, 1999 and February 6, 2002, inclusive, and the claims must be entered by August 17, 2006.
However, the law firm estimates that the average recovery per AIB share is $0.38, before deduction of attorneys' fees.
According to the office notice of the claim, AIB and the other defendants deny all wrongdoing but agreed to settle to "eliminate the expense, risks and uncertain outcome of litigation".
This is the second US case taken on behalf of AIB security deposit holders who lost money on the Rusnak scandal.
In December, the Maryland Appeals Court threw out a derivative action taken on behalf of holders of AIB American Depository Receipts (ADRs), a similar form of security to ADSs.
The court ruled six-to-one that only Irish law should decide the case and that the ADRs did not give the plaintiff company, Tomran, the right to sue in the US.
Other lawsuits resulting from the Rusnak scandal continue.
In February, Judge Batts ruled that AIB could proceed with a $500 million (€416 million) lawsuit against America's two largest banks, Citygroup and Bank of America, for allegedly allowing Rusnak to hide the $691 million in losses.
