Will the 'Hyeonin' Buffett Myth Break?..."Insider Information Use" Exposed

Nonprofit Investigative Media Claims Draw Attention
20 Years of Warren Buffett's Personal Stock Trades Investigated
Method of Raising Berkshire's Stock Price Then Selling

Warren Buffett, chairman of Berkshire Hathaway, who is nicknamed the "Sage of Omaha" and respected on Wall Street, has been accused of investing using non-public corporate information. This claim was reported by the nonprofit investigative journalism organization ProPublica.

On the 9th (local time), the U.S. financial media outlet CNBC cited ProPublica's claim, reporting, "According to IRS data, Buffett is said to have traded stocks in his personal account using Berkshire's non-public information."

ProPublica stated that it obtained about 20 years of Buffett's personal stock trading records through the IRS and analyzed them to reach this conclusion.

Warren Buffett, Chairman of Berkshire Hathaway
[Image source=AP Yonhap News]

According to them, Buffett traded the same stocks in his personal account at least three times before Berkshire bought or sold those stocks. Through this investment method, he earned large sums from stocks of major U.S. banks like Wells Fargo, pharmaceutical company Johnson & Johnson, and the giant retail group Walmart.

In other words, before Berkshire acquired the stocks, Buffett's personal account purchased the same stocks first and then sold them when the stock price rose, thereby securing profits.

In the case of Wells Fargo, in April 2009, Buffett stated in an interview with the U.S. magazine Fortune, "Wells Fargo has become closer to an effective business model than any other bank," and shortly after, the stock price rose by 13%. According to ProPublica, four days later, Buffett's personal account sold $20 million (approximately 2.63 billion KRW) worth of shares.

The media also claims that Buffett traded at least $466 million (approximately 614 billion KRW) in this manner from 2000 to 2019.

If the media's claim is true, Buffett would be guilty of "insider trading" by personally using Berkshire's internal information for profit.

However, under U.S. securities law, employees of Berkshire Hathaway are required to disclose their intended trades in advance before trading stocks. In fact, in March 2011, David Sokol, who was considered Buffett's successor, resigned for violating internal policies through personal stock trading.

According to CNBC, Buffett has publicly stated in the past regarding his personal accounts that he "tries to avoid investing in stocks involving Berkshire." At the 2016 Berkshire Hathaway annual meeting, Buffett emphasized, "I try to avoid anything that could create a conflict of interest with Berkshire."

This content was produced with the assistance of AI translation services.