Warren Buffett, David Sokol And Berkshire Hathaway Sued By Shareholder

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Mason Kirby is not happy about the Lubrizol incident and can't believe Buffett would allow such a thing to go down on his watch.

Kirby, suing to recover damages for the company, contends that Sokol, also a defendant, hurt the firm by taking a stake in Lubrizol before recommending to Buffett that Berkshire buy the company, according to papers made public today in Delaware Chancery Court in Wilmington. “Sokol knew that Buffett would closely consider and likely take his recommendation,” Kirby said. “As a result of Sokol’s unethical behavior, Berkshire suffered significant reputational losses and other damages.”

Kirby alleges that Buffett and Sokol, “working in concert,” violated duties to shareholders “and put the company at risk for a potential adverse SEC action and negative credit rating.”

[Bloomberg]

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Former Berkshire Hathaway Executive Has Only The Nicest Things To Say About Warren Buffett

On March 30, 2011, Warren Buffett penned an open letter expressing support for his former lieutenant, David Sokol, whose trading activities had been called into question. "Neither Dave nor I feel his Lubrizol purchases were in any way unlawful," Buffett wrote. Then, a month later, he told shareholders and reporters gathered at the BKR annual meeting in Omaha that, actually, Sokol was a degenerate bum; a piece of garbage that needed to be taken out, lest it stink up the place. (Actual words: "inexcusable," "inexplicable," in violation of "the company's insider-trading rules and code of ethics." Buffett added that Berkshire "had turned over some very damning evidence" re: Sokol to the Securities and Exchange Commission, to boot.) Though Sokol did not publicly respond to the comments at the time, they presumably stung quite a bit, since having your unassailable ex-boss basically call you a lowlife does not do wonders for the reputation. Now, a year later, after being informed that the SEC would not be taking action against him, is he in a Zen place about life in general and Buffett's words specifically? Are the two men cool? Could Sokol see them being friends again one day? At the very least, is he ready to laugh about them? Yes, yes he is.