Federal regulators have achieved a final ruling against a former senior executive of the Brazilian reinsurance company IRB Brasil Resseguros S.A., who was accused of fabricating claims regarding Berkshire Hathaway Inc.’s investment in the firm to artificially inflate its stock price.
On Wednesday, the U.S. Securities and Exchange Commission announced that a federal court in New York had issued a final consent judgment against Fernando Passos, the former executive vice president of finance and investor relations at IRB, in connection with its civil fraud case.
The SEC’s complaint, which was filed in 2022 in the Southern District of New York, alleged that Passos created and distributed a fraudulent shareholder list that falsely indicated Berkshire had made significant purchases of IRB stock. Prosecutors also claimed he misled investors and a securities analyst about the alleged investment following a report from a short seller that raised doubts about IRB’s financial performance.
Following media reports about the supposed Berkshire investment, IRB’s stock price surged by over 6%, according to the SEC. However, shares subsequently plummeted by more than 40% after Berkshire publicly refuted any claims of investment or intentions to invest in the company.
Without admitting to or denying the allegations, Passos consented to a judgment that permanently prohibits him from breaching antifraud provisions of federal securities laws, bars him from holding any officer or director positions in a public company, and mandates a $500,000 civil penalty. The judgment was entered by the court on February 25.
The SEC initiated the lawsuit in April 2022 and managed the case through its Denver Regional Office.
