A while back I noted that Max Re and Fairfax appeared to be having some difficulties. Fairfax are now facing a class action arising out alleged violations under the Securities Exchange Act of 1934, including failing to make proper disclosure in a flotation prospectus.
One of the complaints in particular is about their supposed
(5) failure to detail the Company’s growing exposure to finite reinsurance agreements within the overall organization
According to Wolf Haldenstein
On March 22, 2006, Fairfax announced that U.S. securities regulators issued subpoenas to third parties (including the Company’s independent auditor and a shareholder) in an ongoing probe into certain financial transactions, including nontraditional insurance or reinsurance product transactions. While it was widely known that the SEC was investigating the U.S. reinsurance industry, this was the first time that the depth of the investigation was disclosed. The Company’s debt securities declined following this disclosure.
And they go on to invite people to sign up for the ride. I’ll post updates as and when.
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