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January 2, 2008 HEARD ON THE STREET Reinsurance Trial May Ask: What Did Buffett Know? By KAREN RICHARDSON DOW JONES REPRINTS This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, use the Order Reprints tool at the bottom of any article or visit: . See a sample reprint in PDF format . Order a reprint of this article now . January 2, 2008; Page C1 Warren Buffett has been riding high in recent days on a wave of good news, but a coming criminal trial of some of his former employees could have a sobering effect. While the Omaha billionaire hasn't been charged with any wrongdoing, the Jan. 7 criminal trial of four former insurance executives of General Re Corp., a reinsurance unit of Berkshire Hathaway Inc., and one former executive of American International Group Inc., could be as much about Mr. Buffett as it will be about a seven-year- old reinsurance transaction that federal prosecutors said was a fraud. The case, to be heard in federal court in Connecticut, is the culmination of a nearly three-year inquiry into what prosecutors said was a sham deal that helped AIG boost its loss reserves in 2000 and 2001 by about $500 million, misleading analysts and investors about the amount of losses AIG could absorb and buttressing its stock price. The trial will likely cast an unflattering light on the alleged inner workings of General Re and renew questions about the involvement of Mr. Buffett in the transaction. On trial will be Ronald Ferguson, 65 years old, former General Re chief executive; Elizabeth Monrad, 53, former General Re chief financial officer; Christopher Garand, 60, General Re's ex- senior vice president of finite reinsurance; Robert Graham, 59, General Re's ex-assistant general counsel; and Christian Milton, former head of reinsurance at AIG. Several of the defendants will assert in the trial that Mr. Buffett, widely known as the "Oracle of Omaha" for his investment prowess and his reputation for integrity, knew about the deal, giving it the stamp of legitimacy. Amid the investigation, AIG acknowledged it accounted improperly for the deal and restated
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.

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