Brazilian reinsurance company IRB Brasil RE has entered into a non-prosecution agreement with the US Justice Department and agreed to pay $5 million in victim compensation to resolve the government’s investigation into a securities fraud scheme.
The Justice Department claims the scheme aimed to fraudulently prop up IRB’s stock price by spreading false information that investment firm Berkshire Hathaway had invested in the company.
The incident, which occurred more than three years ago, caused IRB’s share price to plummet and resulted in the resignation of then President José Carlos Cardoso and CFO Fernando Passos.
According to the Justice Department, IRB admitted executing the fraud scheme through Passos beginning in February 2020 after an investment company published a report questioning the accuracy of IRB’s financial statements and announcing a short position against IRB’s stock, which caused its price to drop.
“In response, Passos developed and executed a scheme to mislead shareholders and the investing public by disseminating and causing to be disseminated materially false information that Berkshire Hathaway had invested in IRB, despite knowing that Berkshire Hathaway had not made any such investment,” the Justice Department reports.
“Passos circulated, and caused subordinate IRB investor relations employees to circulate, false materials to members of the press, analysts, and members of IRB’s board of directors to spread the false information regarding Berkshire...
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