Monday, January 10, 2005

It's Raining Subpoenas at General Re

General Re Corp., a wholly-owned subsidiary of Warren Buffett's investment vehicle Berkshire Hathaway Inc., issued a press release on Jan. 6 (available in the company's Form 8-K here) disclosing that it has received subpoenas from the SEC, New York Attorney General Eliot Spitzer, and perhaps most ominously, from a grand jury in the Eastern District of Virginia.  According to the company:

After receiving the Securities and Exchange Commission’s request for documents and information relating to non-traditional or loss mitigation insurance products on December 29, 2004, General Re Corporation, a wholly owned subsidiary of Berkshire Hathaway Inc., today received a subpoena for virtually identical documents and information from the New York State Attorney General. Consistent with the SEC’s request, the subpoena applies to General Re as well as its affiliates, including Berkshire Hathaway’s other insurance subsidiaries. Berkshire Hathaway and General Re will cooperate fully with the New York State Attorney General.

Berkshire Hathaway and General Re are also cooperating fully with an ongoing investigation by the U.S. Attorney for the Eastern District of Virginia, Richmond Division, relating to one of General Re’s former clients. General Re and four of its current and former employees originally received subpoenas for documents from the U.S. Attorney in October 2003 relating to General Re’s transactions with this client. Recently, General Re received requests for additional information related to this client and for information related to its finite reinsurance business from the U.S. Attorney for the Eastern District of Virginia and the Department of Justice in Washington. Berkshire Hathaway and General Re will cooperate fully with these requests.

A hat trick of investigations (for the hockey-starved) cannot be a good thing, and look for General Re (and Buffett) to seek a global settlement as quickly as possible. Nothing is more prized at Berkshire Hathaway than its triple-A credit rating, and a broad government civil and criminal investigation poses a threat to the entire operation.(ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/01/its_raining_sub.html

Civil Enforcement, Grand Jury, Securities | Permalink

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