In one of the largest regulatory settlements ever, American International Group Inc. has agreed to pay more than $1.6 billion to settle allegations that it used deceptive accounting practices to mislead investors and regulators.
The settlement announced Thursday by New York Attorney General Eliot Spitzer’s office also requires the New York-based company, one of the world’s largest insurers, to adopt changes in its business practices to ensure proper accounting procedures in the future.
The pact settles a civil suit filed last May by Spitzer with backing from the New York State Insurance Department. The Securities and Exchange Commission, which also worked with Spitzer on the investigation, was to file and settle allegations of accounting fraud with the company simultaneously.
Spitzer spokesman Darren Dopp said the settlement was final.
The settlement does not cover Maurice “Hank” Greenberg, the company’s former chairman and CEO who was named in the suit but has pledged to fight it in court.
Spitzer told The Associated Press in an interview, “This is a company that didn’t have to cheat. But once they began, they found it hard to stop. And like an addict, they grew dependent on financial gamesmanship that could ultimately destroy the company.”