{"id":21972,"date":"2023-04-24T21:52:58","date_gmt":"2023-04-24T21:52:58","guid":{"rendered":"http:\/\/lynettelockhart.com\/client\/brazilian-reinsurer-resolves-us\/"},"modified":"2023-04-24T21:53:12","modified_gmt":"2023-04-24T21:53:12","slug":"brazilian-reinsurer-resolves-us","status":"publish","type":"post","link":"http:\/\/lynettelockhart.com\/client\/brazilian-reinsurer-resolves-us\/","title":{"rendered":"Brazilian reinsurer resolves US probe into fake Berkshire Hathaway story"},"content":{"rendered":"\n

WASHINGTON (Reuters) – A Brazilian reinsurer entered a nonprosecution agreement and will pay $5 million to resolve a U.S. probe into a false story that the company had received a significant investment from billionaire Warren Buffett’s Berkshire Hathaway Inc.<\/p>\n

The U.S. Department of Justice said the payment by IRB Brasil Resseguros SA will go to investors who sold its stock on March 4, 2020, less than a week after news of Buffett’s apparent vote of confidence became known.<\/p>\n

IRB shares rose 6.7% on Feb. 27, 2020, after news of the bogus Berkshire stake became public, but plunged 43% over two days after Berkshire said on March 3, 2020 that it was not an IRB shareholder and had no plans to become one.<\/p>\n

The Justice Department later charged Fernando Passos, who had been IRB’s chief financial officer, with planting the story to prop up IRB’s stock price, which had fallen after a short seller questioned the reinsurer’s financial results.<\/p>\n

Passos allegedly fabricated a fake shareholder list showing that Berkshire owned 28 million IRB shares, and spread news of the stake to investors, an analyst and the press.<\/p>\n

“I will spread this story that berk bought 28MM of shares,” Passos allegedly texted a colleague. “Then it becomes true.”<\/p>\n

In settling, IRB admitted that the accusations constituted securities fraud, and pledged to continue upgrading its compliance and ethics procedures.<\/p>\n

The Justice Department also said a larger settlement could threaten IRB’s survival, and IRB represented it could not afford to pay a criminal fine and cover all shareholder losses.<\/p>\n

IRB announced the resignations of Passos and CEO Jose Carlos Cardoso on March 4, 2020. It announced a restatement to address accounting irregularities three months later.<\/p>\n

Passos was indicted in an Iowa federal court in February 2021. He has not entered an appearance, court records show.<\/p>\n

\n

(Reporting by Jonathan Stempel in New York and Kanishka Singh in Washington; Editing by Mark Porter and Marguerita Choy)<\/p>\n

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