INSURANCE

BERKSHIRE HATHAWAY FIRES EXECUTIVE IN CONNECTION WITH INVESTIGATION

Berkshire Hathaway Incorporated said it fired a London-based insurance executive in connection with ongoing state and federal probes into the holding company’s insurance operations.

In a quarterly filing Friday with the Securities and Exchange Commission, Berkshire also said authorities have been investigating certain deals involving Berkshire’s General Re Corp. unit that were “accounted for incorrectly” by parties on the other side. The Berkshire filing shows that state and federal investigators are stepping up their wide-ranging probes of the American insurance industry and particularly its use of “finite reinsurance,” an earnings-smoothing product intended to make the books of public companies look better. Omaha-based Berkshire is headed by Warren Buffett. Berkshire said it fired Milan Vukelic, chief executive of Faraday Group, a British unit of General Re, who had previously served as head of General Re’s international finite business unit. Mr. Vukelic had been under investigation by British regulators for his role in reinsurance contracts dating from 1998. Mr. Vukelic had been on administrative leave since May.

In the quarterly filing, Berkshire also said authorities continue to investigate its role in reinsurance deals totaling $500 million in 2000 and 2001 involving General Re and the insurance company American International Group Incorporated.

In particular, Berkshire said it believes authorities are exploring whether General Re or its units “conspired with others to misstate counterparty financial statements or aided and abetted such misstatements by counterparties.” New York based AIG has already acknowledged that it improperly accounted for the deals.

– The Washington Post

WALL STREET

ANALYST AT SANFORD BERNSTEIN FACES POSSIBLE NASD SANCTIONS

Sanford C. Bernstein & Company’s Brad Hintz, the third-ranked American analyst for brokerages in Institutional Investor’s annual survey, may be sanctioned by the NASD for trading shares of Wall Street firms he covered, people familiar with the matter said.

Mr. Hintz received the equity as compensation when he was an executive at Lehman Brothers and Morgan Stanley. To sell the stock, securities rules required Mr. Hintz to put a “sell” rating on the firms he now covered as an analyst, a situation he called a catch 22. Instead, Mr. Hintz suspended his coverage December 23, then sold Lehman shares and exercised Morgan Stanley stock options in January. Bernstein’s parent company, Alliance Capital Management Holding LP, said Friday in an SEC filing that the firm and an unnamed analyst faced potential NASD penalties for transactions that resembled Mr. Hintz’s. The analyst is Mr. Hintz, said the people familiar with the case, who declined to be identified.

“It’s clear that more regulatory attention is being given to analysts and perhaps there is more readiness to move on enforcement actions than would have been the case previously,” a Fordham University Law School professor and former federal prosecutor, Daniel Richman, said.

– Bloomberg News

ENERGY

PRICE FOR CRUDE OIL REACHES RECORD HIGH

Crude oil rose to a record in New York on speculation American refiners will strain to meet second-half fuel demand as growth in the nation’s economy accelerates. American refiners have used an average 95.4% of their plant capacity the past two months, leaving little cushion should hurricanes or breakdowns disrupt fuel output. “The U.S. economy is growing strongly and it’s sucking up more oil,” a commodity strategist at Commonwealth Bank of Australia in Sydney, David Thurtell, said. “People are feeling wealthy and they’re happy to keep on spending.” Crude oil for September delivery rose 20 cents, or 0.3%, to $62.51 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 9:32 a.m. in Singapore.

– Bloomberg News