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Insurers subpoenaed in municipal GIC probe


NEW YORK--Several financial guaranty insurers have been subpoenaed by the antitrust division of the U.S. Attorney's Office for the Southern District of New York and, in some cases, by the Securities and Exchange Commission, in connection with an investigation of brokers of municipal guaranteed investment contracts.

Companies that say they have received Justice Department subpoenas include XL Capital Assurance Inc., a unit of Bermuda-based Security Capital Assurance Ltd.; an unnamed subsidiary of Bermuda-based XL Capital Ltd.; New York-based Financial Guaranty Insurance Co.; New York-based Financial Security Assurance Holdings Ltd.; AIG Financial Products Corp., a unit of American International Group Inc.; and Fairfield, Conn.-based General Electric Co.Firms that have been subpoenaed by the SEC include AIG unit SunAmerica and another unnamed XL Capital unit.

Rating agencies Standard & Poor's Corp., Moody's Investors Service and Fitch Ratings in New York all said they are not making any rating changes in response to the subpoenas.Fitch, in a statement, said: "Several financial guaranty and insurance companies issue municipal GICs through their affiliated financial products or investment management subsidiaries. These issuers are not engaged in the municipal GIC brokerage business, the apparent primary focus of the ongoing investigations."

Fitch said also that it "would not be surprised to see other providers of municipal GICs receive subpoenas as well."

A spokeswoman for the Justice Department said, "The antitrust division is investigating the possibility of anticompetitive practices in the municipal bond industry."