(Reuters) – US authorities on Monday accused a former senior executive at IRB Brasil Resseguros SA of fraudulently planting a false story that Warren Buffett’s Berkshire Hathaway Inc. had made a significant investment in the Brazilian reinsurer.
The US Department of Justice said that Fernando Passos, 39, who had been the IRB’s CFO, made history in early 2020 to support the IRB’s share price, which had fallen after a card seller questioned the company’s financial performance.
Mr Passos, from Sao Paulo, produced a false list of shareholders showing that Berkshire owned 28 million IRB shares and spread the news about the share to investors, an analyst and later the press.
“I will spread this story that Berk bought 28 MM shares,”; Mr Passo’s text message to a colleague in investor relations is alleged. “Then it will be true.”
Mr Passos was charged with securities fraud and three counts of wire fraud, with a maximum of 80 years in prison.
The US Securities and Exchange Commission filed related civil lawsuits.
Mr Passos is at large. Neither he, nor Berkshire, nor the IRB, responded immediately to requests for comment.
IRB shares rose 6.7% on February 27, 2020, after the news of a fake Berkshire share became public, reflecting a presumed vote of confidence from Mr. Buffett, whose company owns several insurance companies including Geico and General Re.
But shares in the IRB fell 43% in two days after Berkshire said on March 3, 2020 that it was not, had never been and did not intend to become an IRB shareholder.
Authorities said Mr Passos replied “Damn … it’s us [expletive]! “” before attempting to mislead IRB members into believing that the reinsurer’s custodian bank had provided the shareholder list.
The indictment alleges that Passos also allegedly sent a fake e-mail to Berkshire Vice President Ajit Jain that Brazilian press reports had been inaccurate.