Berkshire Hathaway isn't happy with a Reuters story initially published with the headline, "Buffett's Berkshire: We Goofed On Derivative Risks."
(CNBC.com's headline when it ran the same Reuters story was Berkshire Stands By Valuation Of Its Derivatives Contracts.)
The article is based on a June 26 letter from Berkshire to the SEC in which Warren Buffett's company discusses how it calculated the current value of billions of dollars in equity index put option contracts it has written.
Berkshire CFO Marc Hamburg tells Warren Buffett Watch, "There is no indication whatsoever in my letter to the SEC that we made an error or that we underestimated the risks of falling stock prices."
The SEC had asked Berkshire how it determined "weighted average volatility," one of the assumptions that goes into a formula for estimating the current value of long-term option contracts.
The contracts are essentially insurance policies that protect buyers against the possibility that four global stock indexes will lose value between the time the policies were written and the time the policies expire. Those expirations are far in the future, between 2018 and 2028.