Wednesday, October 12, 2005

The Latest on Fairfax Financial Holdings

Posted here was a denial by Fairfax Financial Holdings that it had received subpoenas from the United States Attorney, with a somewhat contrasting Wall Street Journal article telling of the investigation against the company.  (see post here). Now Fairfax is saying otherwise and has issued a clarification here stating:

"In response to certain published information incorrectly reporting Fairfax’s release of October 10, 2005, Fairfax advises that it understands that the U.S. attorney’s office for the Southern District of New York will review information that Fairfax provides to the SEC in response to SEC subpoenas, but that Fairfax has not been advised that it is the target of an investigation by that office. Fairfax confirms its October 10, 2005 release that it has not received a subpoena or other information request from the U.S. attorney’s office. Fairfax continues to cooperate with the SEC’s investigation."

Are they a target of an investigation? Are they a subject of an investigation?  Or are they just a witness? What exactly was Fairfax told?  And if they are being investigated, should the government be issuing a target letter? Is Fairfax trying to hide information from its investors, or is this a situation that the government is not being up front with the company? Or is this a situation that the government is trying to pressure the company to provide information and individuals for their investigation?  The government has the ability to place enormous pressures on companies during an investigation. On the other side, the release of information of a pending investigation can be detrimental to a company.  Is there a better way of doing things here?

(esp)

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