Warren Buffett is dumping 9 million shares of Wells Fargo to avoid Federal Reserve regulations

Berkshire Hathaway is dumping 9 million shares of Wells Fargo worth around $480 million in order to get around possible Federal Reserve regulations.Warren Buffett's company owned more than 10% of the bank after Wells repurchased a large chunk of its shares in 2016.Any entity owning more than 10% of a bank like Wells is subject to increased regulation from the Fed."These sales are not being made because of investment or valuation considerations," said the release of Berkshire. "Rather they are solely motivated by the desire to return to a percentage ownership below the 10% notification threshold under the Change in Bank Control Act of 1978 and Regulation Y (Bank Holding Companies and Changein Bank Control)."The release said that Berkshire consulted with the Fed regarding the additional regulations and decided it did not want to deal with the trouble. From the release:"After several months of discussions with representatives of the FederalReserve, we have concluded that the commitments that would be required of usby the Federal Reserve to retain ownership of 10% or more of Wells Fargo'soutstanding common stock would materially restrict our commercial activitywith Wells Fargo. Therefore, it would be simpler to keep our ownership below10%.Accordingly, on April 7, 2017, we informed the Federal Reserve that wewere withdrawing our filing and that we intend to reduce our ownership inWells Fargo common stock below 10% within 60 trading days."The Berkshire release said thecompany did not purchase shares to put the investment over the 10% threshold and does not have anyintention of buying more shares. Additionally the company said it has no plans to sell any more Wells shares "beyond the quantity required to provide a small safety margin below10%."In a statement to Business Insider, Wells Fargo spokesperson Mark Folk said the bank will continute to work with Buffett and Berkshire."We appreciate the confidence that Berkshire Hathaway has placed in Wells Fargo over the years, both as our largest shareholder and a very valued customer," Folk said. "We look forward to continuing our relationship with them."SEE ALSO:Wells Fargo board slams former CEO Stumpf for accounts scandal, claws back another $28 millionJoin the conversation about this storyNOW WATCH: The disturbing reason some people turn red when they drink alcohol
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