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AIG Faces SEC Probe on Subprime Mortgages: WSJ

The U.S. Securities and Exchange Commission is investigating whether American International Group overstated the value of contracts linked to subprime mortgages, the Wall Street Journal said on Friday, citing people familiar with the matter.

The way AIG valued credit default swaps, including those backed by subprime mortgages, is at issue, the newspaper said.

Prosecutors from the U.S. Department of Justice and the U.S. attorney's office in Brooklyn, New York have asked for information the SEC is gathering, which could signal a criminal investigation, the newspaper said.

AIG , the SEC, the Justice Department and the U.S attorney did not immediately return calls seeking comment.

According to the newspaper, an AIG spokesman said the company would co-operate in regulatory and governmental reviews on all matters.

Credit protection costs have risen for AIG, the world's largest insurer, in recent months as losses mounted from mortgage-related investments.

It posted its largest ever quarterly loss of $7.8 billion last month after writing down assets linked to subprime mortgages.

AIG in 2006 settled an accounting scandal for $1.6 billion.

The probe had earlier led to the ouster of AIG's longtime chief executive, Maurice "Hank" Greenberg.


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