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September 21, 2004 at 08:00 PM
The U.S. Securities and Exchange Commission has warned American International Group Inc. and a subsidiary that it may sue the firms in connection with alleged accounting problems.[@@]
AIG, New York, says AIG itself and the company’s AIG Financial Products Corp. unit received a “Wells notice” from the SEC staff advising them that officials are considering recommending an SEC civil action arising from a 2002 investigation of PNC Financial Services Group Inc., Pittsburgh.
That PNC investigation found that AIG helped PNC take $762 million in volatile, troubled or underperforming loans and venture capital investments off its financial statements by moving them to special entities it created in what are known as PAGIC transactions.
The SEC says PNC used improper accounting for the transactions, which inflated PNC 2001 earnings by $155 million. The company, on the advice of the Federal Reserve board, later restated its income downward by that amount. PNC also agreed to settle an SEC action against it by agreeing to a cease and desist order.
“AIG and AIGFP believe that the proposed action would be unwarranted and will respond” to the SEC, the company says.
A month before PNC reached its settlement with the SEC, AIG Chairman Maurice Greenberg told analysts during a conference call that rumors that the insurance and financial services giant was under investigation by the SEC were unfounded.
