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Court OKs AIG Payments

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WASHINGTON — The U.S. District Court in New York has approved an $843 million distribution to American International Group Inc. investors.

The distribution will compensate about 257,000 investors for misleading financial statements AIG issued from 2000 to 2005, according to officials at the U.S. Securities and Exchange Commission.

Teams at the SEC, the New York state attorney general’s office, the New York State Insurance Department, the U.S. Department of Justice and the U.S. Postal Inspection Service participated in the investigation.

Representatives for AIG, New York, declined to comment on the distribution approval.

The investigation started with a federal and state review of two reinsurance transactions that AIG entered into with General Reinsurance Corp., Stamford, Conn.

Regulators say the Gen Re transactions had no economic substance and were designed to help AIG add $500 million in loss reserves to its balance sheet in the fourth quarter of 2000 and the first quarter of 2001.

Several Gen Re executives recently were sentenced to prison following a trial in Connecticut involving charges stemming from their role in the transactions.

AIG launched an internal probe that ultimately led to a restatement of prior accounting for about 66 transactions and items, officials say.

AIG admitted that the purpose behind some of those transactions was to improve financial results that AIG believed to be important to the market, officials say.

The SEC charged AIG with accounting fraud in February 2006, alleging that the company materially falsified financial statements from 2000 until 2005 through a variety of sham transactions and entities.

The court entered a final judgment against AIG later that month. AIG consented to the order without admitting or denying the allegations.

AIG also replaced the company’s longtime chairman, Maurice Greenberg, and its chief financial officer.

The payment to investors was authorized in June 2007.


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