Fairfax gets Further SEC Subpoena

posted on:
September 26, 2005

author:
Staff

 Fairfax Financial Holdings Ltd. on Monday said it received a further subpoena from the Securities and Exchange Commission as part of the agency’s probe into certain insurance products used to hide losses. 

The Toronto-based property and casualty insurer said the SEC requested documents regarding any transactions in securities of Fairfax Financial, the compensation for such transactions and the trading volume or share price of such securities.

Fairfax said it is cooperating with the request.

Earlier this month, Fairfax said it received a subpoena for information on any reinsurance or non-traditional insurance products and deals the company has been involved in. In June, the insurer said its Fairmont Specialty Group subsidiary received a subpoena from regulators over its dealings with General Re Corp., a target in a widening probe over finite risk insurance products.

Dozens of insurance and reinsurance companies have become involved in the industry probe. Spurred by dealings between General Re and American International Group Inc., the SEC and other government regulators are investigating the use of finite risk insurance. The product is used by insurers to share risk, and regulators and government officials claim it can also be used to artificially inflate earnings.

General Re, a unit of billionaire investor Warren Buffett’s Berkshire Hathaway Inc., is accused of structuring a reinsurance transaction to allow AIG to add a total of $500 million in phony loss reserves to its balance sheet.

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