AIG  (AIG - Get Report) will pay $9.5 million to settle regulators' claims that its brokerage business, being sold in an attempt to appease billionaire activist Carl Icahn, improperly steered mutual fund investors to non-retirement accounts to generate more fees.

From 2012 to 2014, AIG Advisor Group units FSC Securities, Royal Alliance and Sage Point Financial pushed clients whose investments qualified for lower-fee shares toward higher-fee options without disclosing that the higher-cost investments boosted the businesses' income, the Securities and Exchange Commission said

Known as "12b-1 fees," a reference to the SEC rule that governs them, such charges are typically paid to investment advisers to cover marketing of a fund, which in theory benefits the shareholders by increasing the fund's value. 

AIG, the insurer that received a $182 billion bailout to prevent its collapse during the financial crisis, agreed in January to sell the Advisor Group to private equity firm Lightyear Capital and PSP Investments, one of Canada's largest pension investment managers. The deal, slated to wrap up before the end of June, was announced as Icahn used his 3.7% stake to push executives to break up the firm.

"Investment advisers must be vigilant about conflicts of interest when selecting mutual fund share classes because the choice may improperly benefit them at the expense of their clients," Marshall Sprung, co-chief of the SEC enforcement division's asset management unit, said in a statement.

The investment managers steered clients to non-retirement accounts because 12b-1 fees are rebated in retirement or pension accounts, the SEC noted. The brokers neither admitted nor denied the claims, agreeing to pay a civil penalty of $7.5 million and reimburse $2 million in fees collected improperly, the regulator said.

The three businesses, registered as both broker-dealers and advisers, also failed to monitor the level of trading activity in client accounts, which left some paying for more trading capacity than they actually needed.  

According to the Financial Industry Regulatory Authority, or FINRA, New-York based Royal Alliance, which has $3.9 billion in assets, has previously resolved 59 claims with regulators or through arbitration; Atlanta-based FSC Securities , with $5.3 billion in assets, has resolved 39, and Phoenix-based SagePoint Financial, with $4 billion in assets, has handled 19.

"Advisor Group is pleased to have reached a settlement with the SEC over two issues it raised that occurred between 2012 and 2014 at three of our affiliates, FSC Securities, Royal Alliance and SagePoint Financial," an AIG spokesperson said in a statement. "Advisor Group takes compliance with securities regulations seriously and remains focused on serving the best interests of our clients."

The mutual fund industry has steadily expanded over the years, now boasting more than $15.9 trillion in total net assets in the U.S. and 9,260 funds in 2014, according to the Investment Company Institute. About a third of U.S. residents have invested through either a mutual fund or an exchange-traded fund, according to the SEC.