The chief executive of General Reinsurance, one of his senior vice presidents and a former senior vice president have been notified that...
OMAHA, Neb. — The chief executive of General Reinsurance, one of his senior vice presidents and a former senior vice president have been notified that they could face civil charges as a result of a federal probe of the firm’s nontraditional insurance products, its parent Berkshire Hathaway said yesterday.
Berkshire, which is led by billionaire Warren Buffett, said General Re CEO Joseph Brandon received a Wells notice on Thursday from the Securities and Exchange Commission (SEC) that said the SEC staff is considering a recommendation that Brandon be charged with civil violations of securities laws.
Senior Vice President Robert Graham, who is also General Re’s assistant general counsel, also received a notice, as did Christopher Garand, who retired as a General Re senior vice president Aug. 31, Berkshire said.
The notices give Brandon, Graham and Garand chances to respond before the SEC staff makes its formal recommendation.
Most Read Stories
- Road rage in Kent: Subaru strikes Jeep three times
- UW professor got it right on Trump. So why is he being ignored? | Danny Westneat
- 90 degrees?! Heat wave expected in Seattle this weekend
- Latest study: Seattle’s wage law lifted restaurant pay without shrinking jobs
- Seattle police transcript of fatal shooting of Charleena Lyles: 'I don't have a Taser' WATCH
Berkshire said the Wells notices state that the SEC staff may seek an order barring all three men from serving as officers or directors of public companies, as well as other actions including civil penalties.
Brandon is the highest Berkshire Hathaway executive publicly identified as being under SEC investigation. Barron’s magazine in 2004 named Brandon as one of five favorites to replace Buffett when he steps down.
A call to General Re’s Stamford, Conn., headquarters, seeking comment from Brandon and Graham, was referred to Berkshire Hathaway in Omaha. Attempts to reach Garand were unsuccessful. A Berkshire Hathaway spokeswoman said there would be no comment beyond the news releases.
A spokesman for the SEC, John Nester, would not comment yesterday about the notice, saying that under policy the SEC can neither confirm nor deny the existence of investigations.
General Re is a major player in the reinsurance industry, and wide-ranging probes into reinsurance are being conducted in the United States and overseas. Reinsurance is purchased by primary insurance companies to help spread policy risk.
Federal investigators have said some reinsurance products can be used improperly to help companies artificially bolster their financial statements.
General Re has been under investigation over some reinsurance transactions with the insurance heavyweight American International Group (AIG) and with Reciprocal of America, a former liability insurer of doctors, hospitals and lawyers.
AIG has acknowledged that its accounting for a General Re deal was improper.
General Re subsidiary Cologne Re has also been investigated by the German Federal Financial Supervisory Authority regarding some of Cologne Re’s reinsurance products and transactions with New York-based AIG, Berkshire has said.
In June, Richard Napier, a General Re senior vice president, pleaded guilty to conspiring to file false financial reports to burnish AIG’s books. A day earlier, John Houldsworth, a former chief executive at an Irish subsidiary of General Re, pleaded guilty to an identical charge.
Both men have agreed to cooperate with prosecutors’ investigation of the case. Each of them has also been fired, Berkshire has said.
Buffett answered questions about the General Re-AIG probe in New York on April 11, but regulators have said he is not a target of the probe.