Tuesday, July 26, 2005

RenaissanceRe CEO Receives Notice of Possible SEC Suit

The broad investigation of the reinsurance industry by the SEC and other regulators will likely involve a civil enforcement action against two executives of RenaissanceRe Holdings, Ltd., a Bermuda reinsurer.  The company disclosed in a press release (here) that the SEC sent Wells Notices to its CEO, James Stanard, and a former senior executive, Michael Cash, that the Commission staff has determined to file a civil enforcement action against the two related to "finite insurance" products sold to other insurance companies that can allow the purchaser to manipulate its reserves by apparently shifting risks away from the comapany, thereby making the balance sheet look better, i.e. accounting fraud.  As discussed in an earlier post (here), RenaissanceRe effectively fired Cash when he would not voluntarily accept service of an SEC subpoena to testify.  Whether Stanard can survive as CEO is an open question, and will depend in large part on whether a settlement can be worked out with the Commission that does not include a director-and-officer bar or a finding of fraudulent conduct. (ph)


Civil Enforcement, Securities | Permalink

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