American International Group

(AIG) - Get Report

put its foot in its mouth, at least in the eyes of securities regulators.

The

Securities and Exchange Commission

is considering filing civil charges against the big insurer over three "misleading'' press releases it issued describing an investigation into a group of off-balance-sheet transactions that an AIG subsidiary structured for

PNC Bank

(PNC) - Get Report

.

The SEC contends the releases, two of which were released in the past week, sought to minimize the extent of the inquiry by the SEC and a similar investigation by the Department of Justice. Regulators contend AIG misled investors by saying the transactions in question were limited to the deal between AIG Financial Products and PNC.

In fact, regulators allege, the AIG subsidiary "had entered into five other transactions ... with two other counterparties.''

While it's not unusual for the SEC to pursue civil fraud cases against companies for issuing false or misleading press releases, most of the actions have been taken against small companies. It's rare for a company as large as AIG, which employs a small arsenal of lawyers just to review its press releases and other public statements, to be accused of such an infraction.

The allegation could magnify AIG's problems, since many investors had discounted the investigation as old news. The PNC deals occurred three years ago and were well known.

But the SEC says AIG has been misleading investors from the start. It says the first deceptive press release on the matter was issued in January 2002.

The SEC's decision to take action against AIG over the PNC transactions is not surprising given that PNC last year reached a settlement with the Justice Department over its role in the transactions. The bank paid a $120 million fine to settle allegations it improperly transferred more than $700 million in bad loans to an off-balance-sheet venture set up by an AIG subsidiary.

AIG, in the earlier press releases, said it believes "the proposed action is unwarranted'' and will try to persuade the SEC not to pursue a civil action against the company.

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