Chutes and ladders redux.

Warren Buffet’s Berkshire Hathaway announced Monday that Joseph Brandon had resigned as CEO of its General Re Corp. unit.

Federal prosecutors had been pressuring Berkshire to replace Brandon following the fraud convictions of four former Gen Re officers less than two months ago. Neither prosecutors nor the SEC ever charged Brandon with any wrongdoing. He cooperated with the government investigation, never asked for immunity, and in every way acted like a good corporate citizen. As recently as February, in a letter to shareholders, Buffet had praised Brandon as having helped to restore the “luster of the company.”

As I told Securities Law 360, this inappropriate and meddlesome effort at managing the human relations departments of American companies breaks new and dangerous ground for prosecutors. Berkshire Hathaway rightfully wanted to put the government’s criminal investigation behind it, and prosecutors wanted Brandon gone, despite his cooperation. By all accounts he did nothing wrong; otherwise, prosecutors surely would have charged him. The leverage the government exercises when it threatens to continue an investigation if personnel changes are not made is very powerful. Here, it appears that a hardworking, highly regarded corporate executive was thrown down the chute in service of an improper effort at let’s-climb-up-the-corporate-ladder. CR