Berkshire Hathaway Inc. announced that the Securities and Exchange Commission may file a civil fraud complaint against the chief executive, Joseph Brandon, of its General Re Corp. unit over a questionable insurance transaction.
Warren Buffett’s Berkshire Hathaway said Brandon received a “Wells notice” from the U.S. SEC on Thursday, stating that SEC staff is considering recommending action against him for alleged violations or aided and abetted violations of securities laws. The SEC may also seek permanent injunctive relief, and bar him from serving as an officer or director of a public company, disgorgement, and civil penalties against him.
Under the SEC procedures, the recipient of a Wells notice has the opportunity to respond to the staff before the staff makes its formal recommendation on whether any civil action should be brought by the Commission.
The U.S. Justice Department and the SEC have been examining whether Brandon played a role in a controversial 2000 transaction between General Re and American International Group Inc. that helped the world’s largest insurer, improperly increase reserves by $500 million. Brandon became chief executive of General Re in 2001.
Two former General Re executives, John Houldsworth and Richard Napier, in June pleaded guilty to charges that they helped AIG misstate financial results. They were also fired.
Federal investigators and regulators have examined e-mails and notes and asked about conversations between Brandon, Buffett and other executives. Buffett, the world’s second richest person, was interviewed by regulators in April.
The investigations are part of an industrywide probe into whether General Re and other companies helped clients use nontraditional or “finite” insurance to improperly smooth earnings.
Was this article valuable?
Here are more articles you may enjoy.