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AIG TO PAY $126 MILLION IN PROPOSED SEC SETTLEMENT

American International Group said Wednesday it has agreed to pay $126 million to settle federal allegations that the insurance giant helped two customer companies commit accounting fraud.

Under an agreement awaiting Securities and Exchange Commission approval, AIG will pay a $46 million fine to settle issues surrounding transactions that helped regional bank PNC Financial Services Group pump up its earnings.

AIG also will pay $80 million to the Justice Department to settle a related investigation and avoid prosecution.

The tentative deal came as The Wall Street Journal reported that said federal prosecutors are investigating whether AIG Chairman Maurice "Hank" Greenberg manipulated the company's share price in 2001 to save money on acquisition of insurer American General Corp.

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