AIG Reaches Settlement with SEC and DOJ on Structured Transactions

Strategic Insights -

American International Group, Inc. (AIG) has submitted a proposal for settlement with the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) regarding structured transactions with Brightpoint, Inc. and The PNC Financial Services Group, Inc. The proposed agreement, if approved, will fully resolve all claims against AIG and its subsidiaries. AIG will pay approximately $46 million into an SEC disgorgement fund and be subject to an injunction prohibiting future violations of certain federal securities laws.

Key Takeaways:

  • The proposed settlement with the SEC includes AIG paying approximately $46 million into a disgorgement fund for fees associated with the PNC transactions.
  • AIG will also be subject to an injunction prohibiting future violations of certain federal securities laws.
  • The Brightpoint transaction was settled with the SEC in 2003.
  • The proposed settlement includes the appointment of an independent consultant to review transactions entered into between 2000 and 2004 for potential GAAP or accounting violations.
  • AIG Financial Products Corp. (AIGFP) will pay a penalty of $80 million to the DOJ.
  • AIG will establish a transaction review committee and subject it to review by the appointed consultant.
  • AIG Chairman M. R. Greenberg stated that the proposed settlement will provide finality to claims raised by the SEC and DOJ, and is in the best interests of AIG shareholders, customers, and employees.

Statistics:

  • AIG will pay approximately $46 million into an SEC disgorgement fund.
  • The penalty paid by AIGFP to the DOJ is $80 million.
  • The proposed settlement includes the appointment of an independent consultant to review transactions between 2000 and 2004.
  • AIG has operations in over 130 countries and jurisdictions.
  • AIG companies are the largest underwriters of commercial insurance in the United States.
  • AIG's market value is significant and it is a top-ranked insurer in the United States.

Sources:

  • American International Group, Inc. (AIG) press release dated November 23, 2004.