Warren Buffett privately traded in stocks that Berkshire was buying and selling: ProPublica

In an interview given in 2012, Buffett had said that he had invested in JPMorgan Chase even though he preferred Wells Fargo because Berkshire did not own any shares in JPMorgan Chase

Legendary investor Warren Buffett has, on at least three occasions, traded stocks in his personal account in the same quarter or a quarter before Berkshire Hathaway bought or sold the same stocks, according to a Pro Publica report. Buffett is the Chairman and CEO of Berkshire Hathway.

Pro Publica is a New York-based, nonprofit organization dedicated to investigative journalism.

ProPublica claimed that it found details of Buffett’s trades in leaked Internal Revenue Service (IRS) data.

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Buffett has long said that buying what Berkshire was buying would result in a conflict of interest and therefore he avoids that.

The investigative report starts with Wells Fargo’s example. The report said that Buffett had praised the bank, saying that it had come closer to an effective business model “than any other big bank by some margin”. This was in an interview done on April 20, 2009, when the banks were still under the shadow of the financial crisis, according to the report. In four days, by April 24, the bank’s shares had gone up by 13 percent, noted Pro Publica.

“That day, Buffett privately sold off $20 million worth of Wells Fargo shares in his personal account,” it added.

In an interview given in 2012, Buffett said that he had invested in JP Morgan Chase because Berkshire did not own any shares in it.

He added that he preferred Wells Fargo but since Berkshire owned its shares, he could not.

ProPublica quoted him from the interview as saying, “That’s one of the problems I have. I can’t be buying what Berkshire is buying and I’ve got some money around and therefore I go into my second choices or into tiny little companies”.

In 2011, Berkshire’s David Sokol had to resign after it was found that he had acquired shares in a chemical company that Berkshire acquired soon after, said ProPublica.

Around this time, Buffett was quoted as saying that rules weren’t the problem. “The problem is in people breaking the rules,” he said.

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However, the next year, in October 2012, Buffett sold Johnson & Johnson shares worth $35 million. The close of that quarter showed that Berkshire too had sold the same shares. Over the next two quarters, Berkshire sold million more shares, according to the report.

Berkshire’s policy states that if any employee is aware of the company having taken or altering its position in an investee company, then the employee should not trade in the investee company’s share “prior to the public disclosure by Berkshire of its actions”.