In a statement posted to its Web site, AIG, the world’s largest insurer by market value, said it had hammered out an agreement in principle with the US Department of Justice (DoJ). Also, AIG said staff members of the US Securities and Exchange Commission (SEC) have agreed to recommend a similar settlement to the commission. Both settlements also cover the company’s AIG Financial Products Corp. unit.
AIG said the pacts concern structured transactions that it conducted for Pittsburgh-based PNC Financial Services Group Inc. which is Pennsylvania’s largest bank, and Plainfield, Indiana-based Brightpoint Inc., a cell phone distributor, as well as other “related matters.”
Reuters reported that the PNC probe involved whether AIG helped PNC move $762 million of bad loans off its books, inflating profit by $155 million. PNC paid $115 million in fines and restitution to settle SEC charges in the matter, without admitting or denying wrongdoing. The Brightpoint probe concerns AIG’s designing of a policy to help fraudulently conceal and move losses. AIG agreed in September 2003 to pay $10 million to settle related SEC charges, also without admitting or denying wrongdoing.
The proposed settlements come as New York Attorney General Eliot Spitzer takes a look at nontraditional insurance products during his overall insurance industry probe. Spitzer launched the probes October 14 when he accused insurance broker Marsh & McLennan Cos. in a lawsuit of bid-rigging and accepting improper commissions (See Spitzer Takes On Contingent Commissions ).
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