Brazil Regulator Fines Ex-IRB CFO for Fake Berkshire Claim

Brazil · Markets

Brazil’s securities watchdog has drawn a sharp line between a rogue finance chief and his former boss, punishing the architect of a fabricated Warren Buffett investment story while clearing the chief executive who was deceived by it.

The fake Berkshire story that moved markets

In early 2020, a rumor swept through Brazilian markets that Berkshire Hathaway, Warren Buffett’s conglomerate, had acquired a significant stake in IRB Brasil Re, then one of the world’s largest reinsurers. IRB’s stock jumped more than 6% on the news before Berkshire publicly denied any investment, triggering a collapse of over 40%.

Brazil’s securities regulator, the Comissão de Valores Mobiliários (CVM), later concluded the story was entirely fabricated. The regulator identified then-CFO and investor relations head Fernando Passos as the source of the false information.

CVM’s split decision: CFO fined, CEO cleared

In a final judgment reported in December 2024, the CVM unanimously fined Passos the maximum administrative penalty of R$20 million for stock price manipulation. The board cited damage to the reputation of Brazil’s securities market, with directors Otto Lobo, João Accioly, and President João Pedro Nascimento all endorsing the sanction.

Former CEO José Carlos Cardoso, however, was unanimously acquitted of negligence. Director Daniel Maeda found no evidence of bad faith, noting that Cardoso was misled by deceptive tactics employed by Passos and that chief executives may delegate responsibilities.

A separate 2026 case does not overturn the fraud finding

In June 2026, a different CVM proceeding evaluated other alleged infractions by the same former directors. That case examined whether Passos selectively disclosed confidential information and whether Cardoso authorized compensation payments above shareholder-approved limits.

In that separate matter, a CVM substitute director voted to absolve both men of those specific charges. This ruling does not affect the earlier market-manipulation decision, meaning Passos’s R$20 million fine for the fake Berkshire claim stands unless overturned on appeal to Brazil’s National Financial System Appeals Council.

U.S. authorities reinforce the fraud narrative

The Brazilian decision aligns with actions taken by American regulators. The U.S. Securities and Exchange Commission charged Passos with fraud for planting the false story and disseminating fake documents, and he later agreed to a final consent judgment involving penalties and an officer-director bar.

The U.S. Department of Justice described Passos’s conduct as a securities fraud scheme designed to prop up IRB’s stock. IRB itself entered a non-prosecution agreement with the DOJ and agreed to pay $5 million in compensation to affected shareholders.

The wider accounting scandal at IRB

The Berkshire rumor was part of a broader governance crisis at IRB. In early 2020, asset manager Squadra Investimentos published a report alleging IRB’s accounting profits were artificially inflated, triggering a sharp price drop and formal CVM investigations.

Internal probes by KPMG and law firm Felsberg identified former directors involved in accounting irregularities. Some former board members reached settlement agreements with the CVM, paying fixed amounts to close cases without a formal finding of guilt, a practice criticized by investor associations as too lenient.

Frequently Asked Questions

What was the false Berkshire Hathaway claim?

In 2020, IRB Brasil Re’s then-CFO Fernando Passos planted a fabricated story that Warren Buffett’s Berkshire Hathaway had acquired a significant stake in the Brazilian reinsurer. The stock rose over 6% before Berkshire publicly denied any investment, causing shares to plummet more than 40%.

What did Brazil’s CVM decide about the former directors?

The CVM fined Fernando Passos the maximum R$20 million for stock price manipulation and found him to be the source of the false information. Former CEO José Carlos Cardoso was unanimously acquitted of negligence, with regulators accepting he was misled by Passos.

Did a later CVM ruling overturn the fine?

No. A separate June 2026 CVM proceeding absolved both Passos and Cardoso of different charges related to selective disclosure and compensation limits. That ruling did not affect the earlier market-manipulation decision, and Passos’s R$20 million fine stands unless overturned on appeal.

What happened in the United States over the same case?

The SEC charged Passos with fraud, and he later agreed to a consent judgment with penalties and an officer-director bar. The U.S. Department of Justice described the scheme as securities fraud, and IRB entered a non-prosecution agreement, paying $5 million in victim compensation.

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