Buffett's Berkshire Faces Conflict of Interest Probe Tied to Moody's Stake

Bloomberg reports:

Billionaire Warren Buffett's Berkshire Hathaway Inc. is under investigation by the Connecticut attorney general for possible conflicts between its ownership of almost 20 percent of credit ratings company Moody's Corp. and his newly formed municipal bond insurance business.

Attorney General Richard Blumenthal said in an interview yesterday he is examining the ``clear and direct conflict of interest for Moody's to rate a company owned by such a significant Moody's shareholder.''

Moody's gave its top rating last week to Berkshire Hathaway Assurance Corp., created in December as existing bond insurers struggled to maintain their AAA ratings. A favorable rating for Berkshire by New York-based Moody's, or a lower rating for competitors including MBIA Inc. and Ambac Financial Group Inc., may give Buffett's company an advantage.

``We have been aware of this issue, and it has been very actively and immediately involved in our investigation,'' said Blumenthal, referring to a previously announced antitrust probe of ratings companies. ``This financial relationship is part and parcel of the issues involved in our antitrust investigation.''

Saint Warren.