Buffett discusses former aide's ouster
OMAHA, April 30 (UPI) -- Warren Buffett told shareholders Saturday at Berkshire Hathaway's annual meeting in Omaha his ex-lieutenant committed "inexcusable" insider trading.
The resignation a month ago of David Sokol, who led Berkshire Hathaway's MidAmerica Energy division, and questions about Berkshire's reinsurance business in the wake of recent disasters put a damper on the meeting, The New York Times reported. Buffett predicted a loss in insurance operations.
Reporters questioned Buffett about Sokol, who was ousted after he bought shares of the chemical company Lubrizol before suggesting Berkshire make it a takeover target. Buffett said the company has forwarded information to the Securities and Exchange Commission and also chastised himself for not getting more information from Sokol about his Lubrizol investment.
"I don't think there's any question about the inexcusable part," Buffett said. "He violated the code of ethics. He violated our insider trading rules. He violated the principles I lay out every two years."
Buffett, 80, has no clear successor as head of Berkshire Hathaway. He said his son, Howard, will become the unpaid chairman and that he would bet the unnamed leading candidate for chief executive is "straight as an arrow."
EU probing banks over derivatives
BRUSSELS, April 30 (UPI) -- The world's largest banks are under the scrutiny of European Union antitrust regulators looking into their roles in the derivatives market, an EU official says.
The European officials are investigating whether banks such as Barclays and Goldman Sachs have damaged other financial firms in the derivatives arena, The New York Times reported Friday.
"Lack of transparency in markets can lead to abusive behavior and facilitate violations of competition rules," European Union antitrust Commissioner Joaquin Almunia said in a statement. "I hope our investigation will contribute to a better functioning of financial markets and, therefore, to more sustainable recovery."
The Times said it had found earlier that major banks sought to control access to the $600 trillion derivatives market and the same time global regulators are trying to bring transparency and safety to the business.
The newspaper noted derivatives, which move risk from one party to another, contributed to the panic during the financial crisis because banks and regulators did not know all the parties involved in trillions of dollars of interweaving contracts.
The Times said the European investigators are focusing on a type of derivative called a credit default swap, which it described as essentially an insurance contract. They are common in stock investing and mortgage investing, when an investor wants to bet against a company's bond or a mortgage bond, the Times said.
MIT gets majority of Bose Corp.
BOSTON, April 30 (UPI) -- Massachusetts Institute of Technology is the new majority owner of Bose Corp. thanks to a donation by alumnus Amar Bose, the audio products company's founder.
Bose, member of the MIT class of 1951, gave his alma mater the majority of stock in the company in the form of non-voting shares, the school said in a release on its Web site Friday.
MIT will receive annual cash dividends as paid by Bose, with revenues going to sustain and advance the school's education and research mission, MIT officials said.
MIT cannot sell its shares in the privately held company nor will it have a say in its management or governance. Bose will stay on as chairman and technical director.
"Amar Bose gives us a great gift today, but he also serves as a superb example for MIT graduates who yearn to cut their own path," MIT President Susan Hockfield said. "Dr. Bose set the highest teaching standards, for which he is still admired and loved by his faculty colleagues and the many students he taught. His insatiable curiosity propelled remarkable research, both at MIT and within the company he founded. Dr. Bose has always been more concerned about the next two decades than about the next two quarters."
FDIC closes five U.S. banks
WASHINGTON, April 30 (UPI) -- U.S. regulators say they have closed two banks in Florida, two in Georgia and one in Michigan, ordering their operations merged into other banks.
The five failures bring the number of banks put out of business this year by the Federal Deposit Insurance Corp. to 39, The Wall Street Journal reported.
In Georgia, the FDIC closed First Choice Community Bank and Park Avenue Bank. The Bank of the Ozarks is taking over both banks' operations.
Georgia leads the country in bank failures this year with 10 so far. The Park Avenue Bank, which has assets of $953.3 million and deposits of $827.7 million, was the largest of the five banks shut down Friday.
Premier American Bank is taking over First National Bank of Central Florida and Cortez Community Bank. They are the third and fourth banks to fail in the state in 2011.
Community Central Bank of Mount Clemens in Michigan is being taken over by Talmer Bank & Trust in Troy, Mich.
Last year, 157 banks failed in the United States, the most since the savings and loan crisis of the early 1990s.
