Buffett's Berkshire Questioned by SEC on Accounting for Kraft, U.S. Bancorp Losses

Warren BuffettWarren Buffett's Berkshire Hathaway (BRK-A) was questioned earlier in the year by U.S. regulators on why the holding company didn't write down $1.86 billion in losses largely from its investments in Kraft Foods Inc. (KFT) and U.S. Bancorp (USB) during the second quarter, Reuters reported.

In a May letter to the Securities and Exchange Commission, Berkshire CFO Marc Hamburg said earnings potential and the resulting stock appreciation for both companies would render such losses temporary and therefore didn't warrant a write-down, the wire service said, citing documents Berkshire filed with the regulator Monday. Berkshire bought shares of those companies in 2006 and 2007.

Hamburg said the company expected to recover its losses from its positions in Kraft and U.S. Bancorp within two years, Reuters said. Both companies' share prices increased at least 10% during the first quarter, Reuters said, citing the letter from Hamburg.

The SEC questioned Berkshire's decision to not write-down the value of those investments because the company had made the investments more than a year prior to recording its second-quarter results, the wire service said. The Berkshire documents didn't say how the issue was resolved, and representatives for Buffett didn't immediately respond to a request for comment, according to Reuters.

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Poor warren didn't want to show his LOSS!!! bahhahahahahaha. SELL people SELL!

October 25 2010 at 7:35 PM Report abuse rate up rate down Reply

I was waiting for this, this guy just seems to have some magic ball, now I am wondering if it's just slick accounting. Where is the Financial Accounting Standards Board, are they dead? It seems to me that everyone has made up their own accounting. I was just wasting my time in Financial accounting conceptsand intermediate accounting. Should have told my teachers/prof -- this is a waste, wait in about 25 years, I need to learn how to cook the books, and write everything off to that miscellaneous account, and teach me how to do toxic dervative trading -- none of the bond trading for me -- too long of wait. I want my money now!!!

October 25 2010 at 5:02 PM Report abuse rate up rate down Reply