Following on earlier plea bargains, former General Reinsurance Corp. CEO Ronald Ferguson received a Wells notice from the Securities and Exchange Commission late last week in regard to the SEC’s investigation into various “finite risk” structured finance transactions between General Re — a subsidiary of Warren Buffett’s Berkshire Hathaway — with American Insurance General. A Wells notice advises the recipient that the SEC intends to pursue him for alleged violations of securities law and often precedes a criminal indictment on the same matters. Here are the previous posts on the investigation into General Re, AIG and Berkshire.

Mr. Ferguson, who was CEO of General Re from 1987 to 2001, declined to testify in May when he was first interviewed by regulators about his alleged role in the transactions with AIG. According to Justice Department allegations in the criminal cases against former General Re executives John Houldsworth and Rick Napier, Mr. Ferguson agreed in 2000 to structure a finite risk reinsurance deal for AIG that boosted AIG’s loss reserves. After AIG’s board blinked in the face of government threats of a criminal indictment over the transactions, AIG ran off Maurice “Hank” Greenberg — the CEO who built AIG into one of largest insurers in the world — and then admitted — again under government pressure — that it had accounted for the transactions improperly. Although Messrs. Houldsworth and Napier pled guilty in June to conspiracy to commit fraud in conneciton with the transactions and face up to five years in jail, there has been no court finding that the transactions were even improper from a civil standpoint, much less criminal in nature.
That last point apparently has been lost on the New York Times, which begins one of the paragraphs in its story with this statement: “Mr. Greenberg and Mr. Ferguson started the improper financial transactions on Oct. 31, 2000.”