"Termination Letter"

Wed, 02/09/2011 - 20:35

According to a Wall Street Journal editorial,  the SEC recently gave General Re's former CEO, Joseph P. Brandon, vindication in the form of a "termination letter" saying that they were not taking any action against him in connection with a finite reinsurance transaction between Gen Re and AIG in 2000. Appeals are pending on convictions of five other people who were charged on criminal counts in connection with this deal.

Brandon was originally cleared by Munger, Tolles & Olson's wide-ranging internal investigation of General Re, led by Berkshire director Ron Olson. Warren Buffett, Charlie Munger and the rest of Berkshire's board kept Brandon as Gen Re’s CEO until the SEC forced them to terminate him in what the editorial calls "extra-judicial punishment." Since then, Buffett has been effusive in his praise of Brandon in the Berkshire shareholder letters. Still, if Warren Buffett can't decide on principle who runs his companies, who can? 

Such is the power of the SEC that I would not expect much, if any, comment about this letter from Buffett, Munger or anyone else. However, as Brandon resumes his career, I'm reminded of something Buffett once said as he continued to co-invest and work with Jack Byrne after Byrne left GEICO: "Never let go of a meal ticket." 

 

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