Billionaire investor Warren Buffett will be interviewed this week by the SEC, New York Attorney General Eliot Spitzer’s office and the Justice Department concerning a questionable transaction between American International Group (AIG) and Buffett’s General Re, according to Newsweek, but the SEC and Spitzer are taking two different approaches to the investigation.
While, SEC officials are investigating the level of Buffett’s knowledge of the AIG transaction, Spitzer continues to focus on AIG and former CEO, Maurice Greenberg, writes Senior Writer Charles Gasparino. “The question is, ‘What did Buffett know about the deal?'” says one SEC official. “Spitzer can do his own thing, but he doesn’t control what other law-enforcement agencies do. At the end of the day, he doesn’t control what we do.”
Spitzer’s investigation has spurred more organizations than the SEC. Insurance regulators, embarrassed last fall by Spitzer’s investigation of Marsh & McLennan for price fixing, have also begun probing the AIG case. The “Spitzer Effect,” as it is being called on Wall Street, writes Gasparino, has even emboldened the Federal Reserve, which recently surprised Citigroup by saying that it could not execute any major acquisitions until it fixes internal problems.
The SEC is investigating outright abuse, as well as cases where they “sprit of the rules may have been broken,” Gasparino writes. In an interview with Newsweek, SEC chairman Bill Donaldson said his agency “will never relinquish its role as Wall Street’s top cop.”