We are all waiting for the first media report about Warren Buffett, a quarterly business loss of $307 million, and corporate governance & fiduciary responsibility. Will he be sued? Will he be protested? Will he even be questioned? After all, the collapse of Enron was just due to greed, right? But this seems so much more, well, political.

Warren needs to have his sometimes political soulmate, George Soros, get to work on some sort of reverse foreign currency specilation deal to send those rates up instead of down, the way he did in Indonesia in 1998.

Jim: Most of those suits would have to be brought by stockholders and stockholders in Berkshire Hathaway, current market price $82,500.00, are not likely to sue.

Start losing money and they're the most likely to sue.

If Buffett is wrong, the market will punish him. Investors, particularly the institutionals who purchase $82500 shares of stock by the lot, are quick to react to irrationality or incompetence. If he fouls up too much, the stockholders will vote him out. If he makes it apparent that he is more interested in scoring political points or massaging his ego than in making money, he'll get dumped or his stock will turn into junk.

AOL did dump Ted Turner.

--The stubbornly resilient dollar --

DAMN THE US!

We're supposed to be sinking so the NYT can sound superior and European.

Besides, $307m is chump change.

He needs to lose a lot more.

Warren isn't betting against the $, he's betting against me and the American people. We've had our moments, but our overall track record is pretty good.

Berkshire A is down 10.27% from its 52-week high. Berkshire B is down 10.23%.

If Bill Lerach smells victory ($$$), he would sue.

Jim: there is no law suit, management has a right to be wrong as long as they are informed and not self-enriching. Buffett has been wrong before, he once took a big position in USAir. But as long as he is not lining his own pocket, there is no legal liability.

It's not all HB's money, some of it is personal, I think.

Robert - My understanding of the law - limited, I'll admit - is that it is actionable if it's a recklessly irresponsible decision. In other words, the management has a fiduciary responsibility to make some kind of half-assed effort to protect the stockholders' investment. I believe this principle is well-established in precedent.

I'll let someone who knows more correct me if I'm wrong.

Guys:

I agree a 10% drop isn't much. No complaint, as it were. But what about a 25% drop, where the loss is based pretty much solely on currency hedges or 'bets' that aren't working out? If the rest of the "company" is earning money, then is there an action? What if Berkshire has to meet the equivalent of a margin call? I'm no expert, but I doubt if Buffett has to profit personally before there is at least the possibility of a filing. Cases like these (however spurious) made Bill Lerach a rich and powerful man (and an FOB, for a little while).

Ben & Jerry don't run their company anymore, and this is one of the reasons why.

This is hugely oversimplified, but there are two main kinds of suits against corporations for losing money:

1. Federal securities law suits. Under SEC Rule 10b-5, adopted pursuant to power delegated to it pursuant to the 1934 Securities Exchange Act (not to be confused with the 1933 Securities Act), the SEC says that it is illegal to engage in fraud in connection with the sale of a security. This has been held to mean that a company that makes a false statement of material fact is liable to those who bought (if the statement was overly optimistic) or sold (if the statement was overly pessimistic) between the time the statement was made and the time it was corrected. There are also tag-along state law claims made in these suits, but they get subsumed in the federal law claim.

2. State derivative law suits. Corporations are creatures of state law. Under state law, the management of the corporation is the purview of the board of directors, which manages the corporation for the good of the shareholders. Shareholders who are not directors generally can't act on behalf of the corporation, and if they're not happy can just sell their shares. The one exception is the shareholder derivative suit, in which the shareholder goes to court (usually the Delaware Chancellory Court) and asks for permission to sue on behalf of the corporation because the board of directors won't. Usually, the people being sued in the derivative suit are the officers and/or directors of the corporation for wasting corporate assets, or self-dealing, or otherwise violating their fiduciary duty to the corporation. These are not easy cases to win, because the court's generally, and the Delaware court in particular, defer to the board's judgment as to what's best for the shareholders. A common derivative suit occurs after a hostile takeover has been announced. The shareholders sue the directors on behalf of the corporation arguing that the best interests of the shareholders demand that the offer be accepted, and that the board is/will refuse in order to entrench themselves in their cushy jobs.

Without having done any research at all (and, by the way, this does not contitute legal advice), it is unlikely that BH is liable for either type of suit, unless it could be shown that Buffet didn't actually believe that the dollar would fall, but made the investment anyway for some other reason.