US financial regulators have requested information from Warren Buffett’s Berkshire Hathaway group as part of a probe into certain insurance products.
The Securities and Exchange Commission has asked the billionaire businessman’s firm to provide documents relating to the sale of ‘non-traditional’ products.
The watchdog is examining allegations that these products have been misused to manipulate corporate earnings.
Berkshire, which is not accused of any wrongdoing, has said it will cooperate.
The SEC is seeking information from General Re, Berkshire’s reinsurance unit, as part of a wider inquiry into the legality of ‘non-traditional’ policies, also known in the industry as ‘loss mitigation’ or ‘retroactive’ products.
The regulator is investigating claims that some companies have used these products to hide losses from investors. The accounting rules governing these products are unclear.
Leading insurers such as ACE, Chubb, Swiss Re and Zurich Financial, have already been approached to hand over documentation for the investigation.
“Berkshire Hathaway and General Re will cooperate fully with the request,” the company said in a statement.
‘Non-traditional’ policies provided less than 1% of Berkshire Hathaway’s income in the first nine months of 2004.
One fund manager said it was unlikely that Berkshire or any of its affiliate companies would have contravened regulations. “The culture at Berkshire is such that they would congenitally be unlikely to play anywhere close to the line,” Thomas Russo, a partner at Gardner, Russo and Gardner, told Reuters.
“It is possible that an individual could have fallen short of Berkshire’s standards or the law but it is unlikely given Berkshire’s culture.”
The company, which is listed on the New York Stock Exchange, has interests in a variety of different industries but specialises in insurance and re-insurance.
Mr Buffett – known as the Sage of Omaha for his ability to predict stock market trends – is the world’s second-richest man with an estimated fortune of $41bn.