Berkshire to pay $896,000 fine for violating reporting rules
REUTERS 12:44 PM ET 08/20/14
Symbol Last Price Change
BRK/A 202258.88down -341.12 (-0.17%)
USG 29.08up -0.11 (-0.38%)
QUOTES AS OF 12:40:47 PM ET 08/20/2014
By Jonathan Stempel
Aug 20 (Reuters) - Warren Buffett'sBerkshire Hathaway Inc(BRK/A) agreed to pay an $896,000 civil penalty to the U.S. government for having failed to timely report a transaction that boosted its voting stake in building products company USG Corp(USG) .
Berkshire's payment settles allegations made on Wednesday by the U.S. Department of Justice and Federal Trade Commission that the Omaha, Nebraska-based company violated the notice and waiting requirements of the Hart-Scott-Rodino antitrust law.
Berkshire on Dec. 9, 2013, exchanged $243.8 million of USG convertible notes for 21.39 million common shares, giving it a roughly 28 percent stake, worth more than $950 million, in USG, which is based in Chicago.
Regulators said Berkshire was required to report the exchange in advance because the resulting USG stake was more than three times the minimum required, but failed to do so.
The transaction occurred four days after the FTC decided not to punish Berkshire for a similar violation involving financial services company Symetra Financial Corp, relying on Berkshire's assurance that it would comply with Hart-Scott-Rodino.
But the FTC told Berkshire it "still must bear responsibility" for future compliance.
"Although we may not seek penalties for every inadvertent error, we will enforce the rules when the same party makes additional mistakes after promises of improved oversight," Deborah Weinstein, director of the FTC bureau of competition, said in a statement.
A spokeswoman for Buffett did not immediately respond to a request for comment.
According to court papers, Berkshire acknowledged its error, and on Jan. 3 made a corrective filing.
Berkshire had already been a large holder of USG stock when it bought the convertible notes in November 2008. The notes had a 10 percent interest rate, the same rate that Berkshire got when it invested a total of $8 billion in Goldman Sachs Group Inc and General Electric Co at around the same time.
Those investments came in the wake of the financial crisis, and gave Berkshire a reputation as a lender of last resort when financial markets come under strain.
Berkshire operates more than 80 businesses and holds more than $119 billion of equity investments. The $896,000 penalty represents about a half-hour of operating earnings, based on the company's reported $15.14 billion of operating profit for 2013. (Reporting by Jonathan Stempel in New York; Editing by Tom Brown and Leslie Adler)
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