Consumer Protection Commissioner Jerry Farrell Jr. has concluded that the Connecticut Unfair Trade Practices Act provides no legal authority over the $218 million in bonuses that have been paid out by American International Group since December.

AIG has said that it was legally obligated to pay the "retention bonuses," which were designed to keep employees working at its Financial Products subsidiary in Wilton, under an unrelated law, the Connecticut Wage Act.

Gov. M. Jodi Rell asked Farrell last month to investigate whether AIG violated the Connecticut Unfair Trade Practices Act by paying out bonuses "against public policy."

But after reviewing records released to his office by AIG last month, Farrell said Thursday that, although the trade practices act "is a unique and expansive law … it, too, has its limits."

"We conducted an exhaustive investigation and analysis of CUTPA case law, a thorough review of the Unfair Trade Practices Act, itself, and careful scrutiny of the company's documents to determine if Connecticut had any legal authority in this matter as an unfair trade practice, and we found that we do not have subject matter jurisdiction over the issue," Farrell said in a statement.

Farrell said that the act was strictly designed to help consumers with problems they have with businesses.

AIG, which has been given an estimated $182.5 billion in federal bailout money after being crippled by credit default trades, is expected to make an additional $232 million in payments next March to employees at the subsidiary, which is primarily responsible for the trades that brought the company to its knees. The division is being dismantled.

Rell described Farrell's conclusion Thursday as "disappointing" but said she is hopeful that Congress will keep trying to recapture the bonuses and change regulations to prohibit the use of bailout money to pay bonuses.

"Our taxpayers have every right to be affronted by the greed of these executives and every right to expect the bonus payments to be recovered," she said.