One expert said that if officials consider the underlying allegations of a serious-enough nature, it could lead to a Justice Department criminal case against the insurer.

AIG said that what is at issue is a variety of complicated transactions going back to 2001 involving AIG Financial Products Corp. Those activities have drawn SEC and Justice Department scrutiny, and the company issued three press releases about them.

The insurer said the Justice Department advised them that the carrier's release last Wednesday about AIG facing a Justice Department inquiry may have been misleading about the scope of the investigation.

AIG noted that the Justice Department said it was investigating securities law violations involving AIGFP's role in selling and promoting securities designed to create an accounting picture that didn't follow accepted accounting procedures.

AIG has said it believes some of the agencies' actions involve Pittsburgh-based PNC Financial Services Group, which in 2002 reached a settlement with the SEC over charges that it improperly moved troubled, volatile or underperforming assets off the balance sheets with the help of AIGFP in transactions called PAGICs.

In a related case, AIG in 2002 agreed to pay a $10 million penalty to settle fraud charges for selling the mobile phone company Brightstar in Plainfield, Ind., a "purported insurance product" that was "used to report false and misleading financial information to the public." AIG, in settling, denied any misconduct.

AIG stated that the SEC, in its view, believes its press statement about PNC may have been misleading because AIGFP had entered into five other questioned transactions of a different nature that were not disclosed involving two unnamed insurance groups that involved misleading marketing practices.

AIG said that unlike the PNC transactions, none of those transactions "had the primary purpose of moving troubled, volatile or underperforming assets off the balance sheet of the counterparty."

Mac Clouse, a Denver University professor and director of the Reiman School of Finance in Denver, said that the complicated products involved were drawing scrutiny from the SEC lately. The SEC, he noted, concentrates on civil charges, "and if they think things are bad enough, they can recommend that the Justice Department bring criminal charges as well."

Statements that are false that impact a stock's price "can be considered securities fraud," he noted. "If they think that it's serious enough and the dollar impact is big enough, they can decide it qualifies for a criminal trial. The difficulty is figuring out which law was broken. It's a little bit of a gray area."

Neil Lang--a former SEC chief trial attorney now with Sutherland Asbill & Brennan in Washington, D.C.--said the Justice Department would be involved if criminal charges were at stake. However, he cautioned that does not mean criminal prosecution is going to be initiated.