CNNMoney.com

Companies Economy International Corrections Pre-market trading After-hours trading Winners/losers/actives Bonds Currencies Commodities Money Magazine Retirement Mutual Funds Taxes Ask the Expert Money 101 Autos Loan Center Best Places to Live Calculators Mortgage Rates Personal tech Big Tech blog Techland blog Sectors and stocks Fortune 500 techs Tech Talk 100 best places to launch Ultimate resource guide Small biz makeovers FSB 100 Fortune 500 Technology Investing Management Rankings Main Create portfolio Edit portfolio Create Alerts Edit Alerts
News > Newsmakers
    SAVE   |   EMAIL   |   PRINT   |   RSS  
Global inquiry targets Buffett companies
Report: Investigators in 3 countries are examining Berkshire affiliates for financial manipulation.
March 28, 2005: 5:39 PM EST

NEW YORK (CNN/Money) - Warren Buffett takes the hot seat as investigations into the insurance industry turns toward his own subsidiaries, according to a report Monday.

The Securities and Exchange Commission, the Justice Department, New York attorney general Eliot Spitzer and regulators in Ireland, Britain and Australia are examining Berkshire Hathaway affiliates, including General Re, run by Buffett's deputies, according to a report in the New York Times.

There have been no charges and Buffett was not immediately available for comment.

Investigators are trying to determine whether the subsidiaries were involved in a possible financial manipulation at insurance companies American International Group (Research) and the Zurich Financial Services Group, and the extent of Buffett's knowledge of the deals.

Among other transactions, regulators are looking at a deal AIG struck in late 2000 with the General Re. Longtime CEO Maurice "Hank" Greenberg was recently removed by the company's board after regulators began their investigations.

Australian regulators told General Re that the company has until Tuesday to prove why it should not face further investigations for finite dealings in Australia, according to the paper.

Finite reinsurance is used to soften the impact of claims that may have to be paid out over long periods.

The Justice Department is also investigating General Re for questionable policies it sold to Reciprocal of America, a failed malpractice insurer. Tennessee and Virginia regulators have also sued General Re for fraud, contending that the company sold finite policies to Reciprocal that masked financial problems at the company, the Times said.

So far, the inquiries have not hurt Berkshire's (Research) stock price, but the legal risks and possible damage to Berkshire's reputation may become costly.  Top of page

graphic


YOUR E-MAIL ALERTS
Warren Buffett
Berkshire Hathaway Incorporated
American International Group Incorporated
Eliot L. Spitzer
Manage alerts | What is this?