Back on December 8, 2011, the Wall Street Journal disclosed something interesting in light of recent political news, namely, billionaire investor Warren Buffett’s Berkshire Hathaway conglomerate recently obtained an exception from a SEC disclosure rule. It turns out Buffett has sought SEC confidentiality exemptions in no less than 10 of the past 20 quarters, according to the WSJ article below.
Given Mr. Buffett’s recent political activism, it is interesting he has opted to keep Berkshire investments in the dark. It is also interesting because of Mr. Buffett’s advocacy of higher tax rates, though he personally carefully structures his own income to minimize his own taxes. Perfectly legal, but an example of “do as I say, not as I do”.
The rationale for the SEC exemption is certain high-profile investors, like Mr. Buffett’s firm, could be harmed if people know about their investing activities. Presumably, though, any firm is at a competitive disadvantage to have to disclose their holdings to their competitors. The WSJ reports:
“Fifty money managers have used Securities and Exchange Commission rules to keep confidential their stakes in certain companies so far this year, an analysis of securities filings shows. The longstanding practice got a new burst of attention last month when billionaire Warren Buffett’s Berkshire Hathaway Inc. disclosed a $10.7 billion bet on International Business Machines Corp. The Omaha, Neb., conglomerate had been secretly accumulating the shares since March, twice receiving an exemption from the SEC on a 36-year-old law that requires investment firms owning more than $100 million in publicly traded stocks to disclose their holdings quarterly.”
Disclosure: at the time of this writing, the author was a long-term owner of Berkshire Hathaway stock. SEC building picture from Wikipedia Commons.