Between April 2001 and January 2003, researchers at the University of Illinois in Urbana/Champaign released 386 pigs from biotech studies to a livestock dealer, the agency said.

Under the study requirements set by the FDA, the pigs should have been incinerated or sent to a rendering plant for disposal.

"The researchers claim that these pigs, which were the offspring of transgenic animals, did not inherit the inserted genetic material from their parents - that is, they were not themselves transgenic," the FDA said in a statement.

The agency said it could not verify the researchers' claim because they failed to keep enough records to assess whether the baby pigs inherited the added genetic material.

The pigs were part of a study in which genes were engineered so that proteins would be produced primarily in the milk-producing glands of female pigs.

"None of the pigs sent to slaughter are believed to have been old enough to lactate," the FDA statement said. That means any meat or other products derived from the animal should not be harmful to humans, it added.

Bill Murphy, a university spokesman, said researchers were aiming to produce pigs with genes to increase milk production and improve digestion.

He said the university believed it was permissible to send to market the pigs that did not test positive for the genes. All of the pigs delivered to the livestock dealer tested negative and therefore were not "transgenic," Murphy said.

FDA officials "believe we should seek permission for (sending to market) anything involved in the experiment, transgenic or otherwise. We didn't understand that. We're happy to comply with it," Murphy said.

The pigs were sold to Parks Livestock in Oakwood, Illinois, said Van Anderson, also a university spokesman. Officials at Parks Livestock could not immediately be reached for comment.

The FDA said it was continuing to investigate the incident in collaboration with the U.S. Agriculture Department.

The researchers' failure to destroy the pigs is a "serious violation" of FDA rules, the agency added.

Possible penalties for such a violation could include fines or suspension of studies, Deputy FDA Commissioner Lester Crawford said.

FDA officials "have no reason to believe this is widespread," Crawford said, but added the agency will intensify inspections of similar research.

Various U.S. researchers have been experimenting with genetic engineering of pigs to produce such things as proteins to treat human hemophilia and blood-clotting diseases. Other studies have focused on how to insert a gene that will produce leaner pork for consumption or more environmentally-friendly pig manure.