Buffett loses $1bn after Goldman charge

The value of Warren Buffett’s options to buy Goldman Sachs shares fell by over $1bn after the SEC sued the investment banking giant on Friday.

Bloomberg reports the warrants, which give Buffett's Berkshire Hathaway the right to buy Goldman Sachs common stock for $115 a share, were worth about $1.99bn at 4:01pm on Friday, down 34% from $3.01bn on Thursday.

Goldman Sachs' share price fell $23.57, or 13%, to $160.7 on the NYSE on Friday following news the SEC was suing it for fraud tied to collateralised debt obligations.

Buffett's Berkshire obtained the warrants on $5bn of Goldman Sachs stock as part of an agreement that extended financing to the bank during height of the 2008 credit crisis. Berkshire has $5bn of preferred shares in Goldmans, paying 10% interest.

Ronald Olson, a Berkshire director, said earlier last week the deal reflected Buffett's belief in "not just the strength of Goldman but its integrity". Buffett has previously praised Goldman Sachs CEO Lloyd Blankfein for his stewardship during the recession.

In a statement late on Friday, Goldmans said the SEC's charges were completely unfounded in law and the bank will defend the firm and its reputation.

"We did not structure a portfolio that was designed to lose money," it said.