The Securities and Exchange Commission has allowed American International Group to accept cash payments for advisory client solicitations. AIG sought no-action relief in connection with its settlement agreements with the SEC and various states. On Feb. 16, the U.S. District Court for the Southern District of New York entered a final judgment against AIG, alleging the firm used its reinsurance transactions with General Re to falsely inflate AIG's loss reserves by $500 million. AIG requested relief from rule 206(4)-3 of the Investment Advisers Act, which prohibits an adviser from paying a cash fee to any solicitor that has been enjoined by a court judgment.

In a no-action letter dated Feb. 21, the SEC stated it will not recommend an enforcement action against any adviser that makes a cash payment to AIG for the solicitation of advisory clients. "Absent no-action relief, AIG would be unable to receive cash payments, directly or indirectly, for the solicitation of advisory clients," AIG's request letter stated. AIG, moreover, was not sanctioned for activities as an adviser or solicitation of advisory clients, the letter said. Although AIG is not currently an IA, it could engage in advisory activities in the future, the AIG letter stated.

The relief was requested to ensure the firm could one day receive cash for client solicitations, if it chooses to offer those services in the future, said Liz Osterman, assistant chief counsel, of the SEC's Division of Investment Management. It's common for firms in AIG's position to seek this type of relief, because the disqualification under the Advisers Act is automatic, said a lawyer involved in drafting AIG's letter.