American International Group, Inc. announced that AIG and its subsidiary AIG Financial Products Corp. (AIGFP) have received a “Wells Notice” from the Staff of the Securities and Exchange Commission (SEC).
The notice, a preliminary to the filing of a lawsuit against the companies, informed the recipients that the Staff is considering recommending that the SEC bring a civil action against AIG and AIGFP alleging violations of the federal securities laws.
The investigation centers on AIGFP’s structuring of three special purpose financial vehicles for the Pittsburgh-based company PNC Financial Services Group, Inc. in 2001. The PNC transactions were the subject of a SEC action against the company in 2002. They were terminated early the next year.
Through the use of the derivative vehicles PNC was reportedly able to transfer some $762 million worth of doubtful loans and investments off its books, and on to AIG’s. The SEC has charged that the transactions violated accepted accounting principles and enabled PNC to overstate its 2001 earnings.
“AIG and AIGFP believe that the proposed action would be unwarranted and will respond to the Staff,” said the company’s bulletin, but gave no further details.
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