(Bloomberg) A unit of American International Group Inc. was fined more than $1.1 million by a securities industry regulator for steering its sales force to some mutual funds in return for brokerage fees.

The fine was levied by the NASD against Houston, Texas based American General Securities Inc., a brokerage unit of AIG, according to a statement today by the organisation formerly known as the National Association of Securities Dealers.

The company neither admitted nor denied the allegations in the settlement, the statement said. NASD found that from January 2002 through September 2003, the AIG unit offered mutual fund companies preferential treatment, such as greater access to the unit?s sales force, in exchange for a fee.

Three of the 12 fund groups that participated paid their fees by directing trades generating about $2.7 million in commissions to the brokerage, NASD said.

The action violated NASD?s Anti-Reciprocal Rule, which prohibits firms from favouring the sale of particular mutual funds on the basis of brokerage commissions received, the statement said. NASD said it has brought actions against six other AIG units for similar violations. Christopher Winans, spokesman for New York-based AIG, declined to comment.

And it was announced yesterday that AIG paid Martin Sullivan ? them man who replaced ousted chief executive officer Maurice (Hank) Greenberg ? $13.8 million in his first year in charge. Sullivan?s 2005 compensation included a salary of $963,462, a bonus of $6.79 million, and stock options valued at $2.95 million on their grant date, New York-based AIG said in a regulatory filing. Other compensation totalled $3.08 million.

AIGshares fell 12 cents to close at $65.95 in New York Stock Exchange Composite trading.