Warren Buffett’s Company Fined by Justice Dept. Over Stock Purchase

Warren E. Buffett may be one of the most admired investors in the world. But that does not exempt his company, Berkshire Hathaway, from having to follow federal securities investment rules.

Berkshire has agreed to pay $896,000 to settle accusations by the Justice Department that it did not follow antitrust guidelines before acquiring additional shares in the USG Corporation in December,

according to a filing in the Federal District Court in Washington on Wednesday.

Underlying the Justice Department’s case against the conglomerate is the Hart-Scott-Rodino Antitrust Improvements Act, a 38-year-old law that essentially requires companies and investors to notify regulators before they carry out mergers or stock purchases above a certain size.

It is one of the most basic parts of the deal business, with acquirers regularly stating that they will wait for “H.S.R.” approval before carrying out their transactions.

Behind Berkshire’s violation was an old investment in USG, a producer of construction materials like drywall. In 2006, Mr. Buffett’s company owned about 19 percent of USG. Two years later, Berkshire bought $300 million worth of securities known as convertible notes, which allowed the conglomerate to swap out for common stock in the materials maker at a price of $11.40 a share.

Late last year, USG said it would redeem $325 million worth of convertible notes, and Berkshire took advantage by cashing out its holdings, taking its stake up to 26 percent. Yet Berkshire did not file for Hart-Scott before exercising its right to trade in the convertible notes.

In January, Berkshire belatedly filed for Hart-Scott approval, acknowledging that it should have done so sooner.

USG was not the first time Berkshire ran afoul of the Hart-Scott rules. Last summer, it exercised options that allowed it to buy additional shares of Symetra, a financial services company. A week later, the conglomerate acknowledged to the Justice Department that it should have filed, though its oversight was “inadvertent.”

At the time, the Justice Department said it would not recommend civil penalties, but called on the company to put in safeguards to prevent a future lapse.