(Bloomberg) — The former chief financial officer of a Brazilian reinsurer was charged with fraud for allegedly spreading false stories that Warren Buffett’s Berkshire Hathaway Inc. had bought a stake in the company.
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A federal judge in Iowa on Monday unsealed an indictment against Fernando Passos, former CFO of IRB Brasil Resseguros S.A., saying he knowingly promoted the fake story in the press to push up the company’s stock price. Passos was also sued by the Securities and Exchange Commission in federal court in New York on Monday.
According to prosecutors, Passos planted false stories in the press, created phony documents and fabricated an an email exchange with a Berkshire executive to back up his claim that Buffett’s company was an IRB investor.
In a text to a colleague, Passos allegedly said Berkshire had “significantly increased its shares in IRB,” adding that “this info is confidential, but if we could send to a journalist we trust in the economic area who would publish without citing IRB as the source [that] would be excellent.”
Berkshire Denial
Passos, 39, lives in Brazil and isn’t in U.S. custody, the Justice Department said. A lawyer for the former executive couldn’t immediately be identified.
Press reports that Berkshire owned a stake in IRB and was considering expanding its holdings prompted Buffett’s company to issue a statement in March 2020 denying any investment in the Brazilian company. IRB shares promptly tumbled more than 41%.
When Passos learned of Berkshire’s denial from IRB’s director of investor relations, he responded “Damn!” and “We’re [expletive]!” according to prosecutors.
Passos and the company’s chief executive officer, Jose Carlos Cardoso, resigned shortly after Berkshire issued its denial. IRB Chairman Ivan Monteiro had already stepped down a few days earlier. Neither Monteiro nor Cardoso have been accused of wrongdoing.
An assistant to Buffett didn’t immediately respond to a request for comment on the cases against Passos.
Short-Seller Questions
Passo began spreading the fake story after a short-seller publicly questioned the company’s financial results, causing the stock to drop, according to the government. The stock rose 6% on the reported Berkshire stake.
Passos faces up to 20 years in prison if convicted on the criminal charges. The SEC wants to bar Passos from acting as an officer or director of a public company and is seeking unspecified money penalties.
The criminal case is U.S. v. Passos, 21-cr-00028, U.S. District Court, Southern District of Iowa. The SEC case is U.S. Securities and Exchange Commission v. Passos, 22-cv-03156, U.S. District Court, Southern District of New York (Manhattan).
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
