HA ha...
Posted on 08/07/2005 7:35:10 AM PDT by Grampa Dave
Berkshire says regulators probe its books
By Jonathan Stempel Sat Aug 6, 8:40 PM ET
Warren Buffett's Berkshire Hathaway Inc. (NYSE:BRKA - news) (NYSE:BRKB - news), whose General Re Corp. unit has been investigated over its role in helping insurer American International Group Inc. misstate results, said governmental authorities were inquiring about some of its own accounting.
In its quarterly report filed on Friday with the U.S. Securities and Exchange Commission, Berkshire said the authorities were looking into the accounting by some of its insurance subsidiaries for finite reinsurance. Investigators have for several months in an industrywide probe been questioning whether such nontraditional reinsurance products can be used to mask losses or smooth earnings.
Berkshire, based in Omaha, Nebraska, also said the governmental authorities are questioning whether General Re or its subsidiaries "conspired with others" to misstate financial statements.
The disclosures suggest that investigators may be widening their probe beyond General Re's role in a 2000 reinsurance contract that helped AIG (NYSE:AIG - news) improperly increase reserves by $500 million. Two former General Re executives in June pleaded guilty to conspiracy charges in the matter.
"I suppose regulators are simply being thorough, and seeing if Berkshire accounted for something different from how its counterparties did," said Steven Check, who oversees $470 million at Check Capital Management Inc. in Costa Mesa, California, including $45 million in Berkshire shares. "Warren Buffett has done things right for decades, so for me the benefit of the doubt should go to him."
Berkshire was not immediately available for comment. FIRED EXECUTIVE
The company also disclosed that Milan Vukelic, the chief executive of Faraday Group, a British unit of General Re, was fired in July, two months after being placed on leave.
British regulators have investigated Vukelic over transactions in 1998 between General Reinsurance Australia Ltd. and affiliates of FAI Insurance Ltd. FAI was acquired the following year by HIH Insurance Ltd., Australia's No. 2 general insurer, which became insolvent in 2001. Vukelic once ran General Re's international finite reinsurance business unit.
Among other regulators examining activities involving Berkshire units are federal prosecutors, the SEC, New York Attorney General Eliot Spitzer, and regulators in Australia, Canada, Germany and Ireland.
Berkshire also said Friday that second-quarter profit rose 13 percent to $1.45 billion, or $941 per Class A share, as higher investment income and fewer losses from insurance units helped offset a $619 million pretax loss from betting the U.S. dollar would fall.
Buffett has wagered against the U.S. dollar since 2002 amid concern about high U.S. trade and budget deficits. According to Forbes magazine, Buffett is the world's second richest person, after Microsoft Corp. (Nasdaq:MSFT - news) Chairman and Berkshire director Bill Gates.
Berkshire Class A shares closed Friday at $83,500, and its Class B shares closed at $2,787. Both have fallen 5 percent this year.
What is interesting here is the international aspect.
Berkshire is being investigated by other countries.
This should send chills up the backs of any fund manager, fund company and their boards not to play PC games instead of investing on sound principals.
Warren Buffet, the Gizard of Omaha, cost his fund owners $619 million in his bets against the $ in the effort to defeat GW in 2004.
Buffet should be frog marched to courts around the world for this terrible investment in Moi Kerry instead of sound business investments.
professional traders will tell you that emotion is their number one enemy - looks like Warren let his ego and contempt for Republicans get the best of him.
Bravo! You nailed the crux of the problem.
"Bravo! You nailed the crux of the problem."
Now it is time for Berkshire shareholders in America and around the world to Nail The Gizzard of Omaha's a$$ for his political investment that cost them 619 million $'s.
What is interesting here is the international aspect.
Berkshire is being investigated by other countries.
This should send chills up the backs of any fund manager, fund company and their boards not to play PC games instead of investing on sound principals."
With all due respect to you sir, that may be a little excessive.
A couple of years ago, I took a number of Annual Reports for large public companies in which I am interested, and ordered their annual SEC filings; restated the Annual Report numbers to a realistic GAAP income statement. Berkshire was the only company that gives you an honest financial statement.
And in doing that, I looked at General Re--and concluded that accounting for a reinsurance entity of this character is an almost impossible task--the presentation of financial results in the Berkshire filings is in my view realistic and directed to an accurate accounting for the results of operations. Maybe not free from error but free from intended misrepresentation in an effort to make an accurate report.
I am not a defender of Buffett's politics; and if you read his published pronouncements on management and investing, he does not always do it the way he says to do it. However his business practices and objectives are to return the most and best results for his shareholders and over the term, he has been very effective. He is an honorable steward of the shareholder's assets and that is unusual in the modern business world.
I have said here on numerous occasions including one time very shortly after he did it that his bet against the dollar was premature and wrong. Although many knowledgable investment managers feel the greatest threat to their financial position is the effort by the Federal Reserve to debase the American dollar, the fed has been ineffective on that effort as it has been in connection with long term management of the monetary base. And the end game is likely to reward Mr. Buffet as correct on the longer term issue.
Oh I think that if his losses re shorting the dollar ever get to civil courts, he will lose his left wing A$$!
On what theory?
The he pulls this stupid "shorting the Dollar" and almost paralleling George Soros in his desperately trying to damage Bush... Good greif!!! I sure hope you're not trying to be an apologist for the half-blind "Oracle of Omaha!" Hear that giant flushing sound? That's a lot of his credibility going right into the leech field!!!
Buffet is an uber liberal.
Go invest with him and his ilk.
I will stay away.
Great "Wilsonian" line.
Joe Wilson has some great one liners, and then his lying act falls apart.
Hey! What's up with this little bullet comin over the wires???
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