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Tuesday May 10, 07:49
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SEC will sue more than one General Re executive
(by Julia Jenson)
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The Securities and Exchange Commission is going to launch suits against several executives of General Re, a subsidiary of Berkshire Hathaway Inc. Thus, on May 2, Richard Napier, a senior vice president at General Re’s U.S. office, was told that he can be sued for his help to AIG in raising its reserves for claims. There are going to be more officers sued, according to a person familiar with the matter.
General Re is suspected by regulators of having sold a particular type of reinsurance to AIG that helped the world’s largest insurer to smooth fluctuations in earnings. Warren Buffett, Berkshire Hathaway’s legendary leader and the world’s second-richest man, has denied any knowledge of the improper use of the transaction by the insurance company.
``The SEC has been saying that it will bring actions against individuals who either directly violate the securities laws or cause others to violate them,’’ said Michael Missal, a former SEC attorney. ``It’s clear they’re really going after these cases now.’’
The suspected executives are likely to receive Wells notices meaning that the commission has uncovered potential violations but wants to give responsible individuals a chance to cooperate before it proceeds with enforcement action.
There has already been an admission on the part of the AIG that the transaction with General Re incorrectly boosted its reserves by as much as $500 million. This deal led to subpoenas from the SEC and New York Attorney General Eliot Spitzer on Feb. 14, ouster of Maurice ``Hank’’ Greenberg as chief executive and a delay in AIG’s filings that have to remove overstatement of the insurer’s net worth by $2.7 billion.
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