Bermuda reinsurance executive fined by SEC for 'sham' deal
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| Published on Friday, November 9, 2007 |
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By Ian Katz and Josh P. Hamilton
NEW YORK, USA (Bloomberg): The US Securities and Exchange Commission has settled its case with a former RenaissanceRe Holdings Ltd. executive, fining him $130,000 for allegedly participating in a "sham transaction" to smooth earnings.
Michael W. Cash, a former senior executive of a subsidiary of Bermuda-based reinsurer RenaissanceRe, improperly accounted for a $50 million transaction, the SEC said in a statement on Thursday. Cash settled with the Washington-based regulator without admitting or denying the allegations.
Because of the way RenaissanceRe accounted for the deal, the company "materially understated income in 2001 and materially overstated income in 2002," the SEC said. In February, RenaissanceRe agreed to pay $15 million to settle SEC accusations it created an accounting "cookie jar" to hold profits that could be booked later.
More than a dozen insurers and reinsurers have been questioned in state and federal probes of contracts that can be used to smooth earnings. Regulators are looking into deals, like a RenaissanceRe transaction with Inter-Ocean Reinsurance Co., suspected of having no economic purpose for one of the parties.
RenaissanceRe neither admitted nor denied wrongdoing, agreed to hire an outside consultant and pledged to take any steps recommended to strengthen its auditing and compliance departments as part of the settlement. Attempts to reach Cash by telephone weren't immediately successful.
Cash's settlement, approved by a federal judge in New York, also bars him from working as a public company director or officer for five years.
The SEC in September 2006 sued former RenaissanceRe CEO James Stanard, for allegedly overseeing the transactions. That case is still pending. | | | | Reads : 339 | | | |
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