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Sokol Violated Berkshire Ethics

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gret

Well-known member
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Looks like there're attempting to deflect some tough questions before the shareholder meeting. Wonder what else is is in the closet that is yet to come out.
From Bloomberg

David Sokol violated Berkshire Hathaway Inc. (BRK/A)’s standards by misleading the company about his personal stake in Lubrizol Corp., which he recommended as a takeover target to Chairman Warren Buffett, the company said.

“His purchases of Lubrizol shares while serving as a representative of Berkshire Hathaway in connection with a possible business combination with Lubrizol violated company policies, including Berkshire Hathaway’s Code of Business Conduct and Ethics and its Insider Trading Policies and Procedures,” the Omaha, Nebraska- based company said today in a statement.

Berkshire today released a report by its audit committee about Sokol’s trading before the $9 billion deal was announced on March 14. Buffett had said in a March 30 statement announcing Sokol’s resignation that he didn’t believe the trades violated U.S. law. Berkshire will post a complete transcript of all questions and answers related to the Lubrizol-Sokol matter as soon as possible after the company’s annual meeting on April 30, Buffett’s firm said today.

Sokol’s “misleadingly incomplete disclosures to Berkshire Hathaway senior management concerning those purchases violated the duty of candor he owed the company,” according to the report.
​
 
gunfyter said:
G4Dude? :(


Lets hear about Union thugs now.... :rolleyes:
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Whoa cowboy...so quickly with the unions?

Ambivalent about unions, but they have their fair share of crooks and freaks and like to butter their own bread too.

It should be interesting to see where this Sokol thing goes. Most in the industry are still scratching their heads (and other body parts) on how you can have blow out numbers in an industry that is flat on its behind.
 
Berkshire finally scolds Sokol

Posted by Colin Barr
April 27, 2011 5:00 pm

Clearing the air before the coming Buffettpalooza weekend, Berkshire Hathaway belatedly slapped the wrist of its wayward son.
A report from the company's audit committee said Wednesday that David Sokol broke company trading rules and lied to CEO Warren Buffett. Sokol is the longtime top executive who unexpectedly quit Berkshire (BRKA) last month amid questions about his trading in shares of a company Berkshire was acquiring.
Not such a swell guy, it turns out

The company's statement comes three days before its heavily attended annual meeting in Omaha and four weeks to the day after Buffett shocked investors by announcing Sokol's departure.
Sokol was the hard-charging, abrasive chairman of Berkshire's MidAmerican Energy unit and was widely depicted in the press as a possible successor to the 80-year-old Buffett -- though Wednesday's report reveals he had other ideas.
The move could take some heat off Buffett, though the Sokol affair will still surely be the talk of the Qwest Center Saturday when Buffett addresses his acolytes.
Critics rained scorn on his initial handling of the Sokol news, saying he failed to live up to his commonsense standard of presenting investors with the facts and letting them decide.
Instead, Berkshire issued a press release that read to many as a defense of Sokol, whose actions are revealed in the audit committee's report to have been indefensible. The report says the first Buffett heard of Sokol's stock purchases was through, gasp, an investment banker.
On the morning of March 14, Berkshire Hathaway and Lubrizol announced the signing of the merger agreement. A Citi representative with whom Berkshire Hathaway did business congratulated Mr. Buffett on the merger agreement, and told Mr. Buffett that Citi's investment bankers had brought Lubrizol to Mr. Sokol's attention. This was the first time Mr. Buffett heard that investment bankers played any role in introducing Lubrizol to Mr. Sokol, and did not square with Mr. Sokol's remark in January that he had come to know Lubrizol by owning the stock
​
The report also reveals that Sokol didn't view himself as a potential successor to Buffett – or at least, didn't after the trading transgressions came to light.
On March 29, Mr. Buffett provided Mr. Sokol an opportunity to review for accuracy a draft Mr. Buffett had prepared of a press release announcing Mr. Sokol's resignation and disclosing Mr. Sokol's Lubrizol trades. At Mr. Sokol's request, Mr. Buffett deleted from the release the one passage Mr. Sokol said was inaccurate: a passage that implied that Mr. Sokol had resigned because he must have known the Lubrizol trades would likely hurt his chances of being Mr. Buffett's successor. Mr. Sokol told Mr. Buffett that he had not hoped to be Mr. Buffett's successor, and was resigning for reasons unrelated to those trades.
Except for that deletion, Mr. Sokol concurred in the accuracy of the press release. For example, Mr. Sokol left unchanged the statement that when Mr. Sokol made his purchases, he "did not know what Lubrizol's reaction would be" if Mr. Buffett developed an interest in a transaction. Mr. Sokol also left unchanged Mr. Buffett's statement that he had "held back nothing in this press release."
​
Buffett may not have held anything back with that press release, but he didn't do himself any favors with it either. In the great PR tradition, it buried the news of Sokol's transgressions, instead starting with the claim that Sokol had resigned to "utilize the time remaining in my career to invest my family's resources in such a way as to create enduring equity value and hopefully an enterprise which will provide opportunity for my descendents and funding for my philanthropic interests."
This comment established Sokol as off his rocker, but the bigger news was to come. Buffett later got around to mentioning in that letter the rather daunting fact that he had learned Sokol recommended Berkshire acquire lubricants maker Lubrizol (LZ) without disclosing his purchase of the company's shares.
Without offering much in the way of details, Buffett then said that "neither Dave nor I feel his Lubrizol purchases were in any way unlawful. He has told me that they were not a factor in his decision to resign."
Buffett not being a judge, that line drew a few hoots and hollers. And though Sokol is reportedly getting some attention now from the Securities and Exchange Commission on the legality front, who knows if we will ever hear again about that.
Anyway, if the Berkshire audit committee's report is predictably protective of Buffett, at least no one can say now that the company is blind to the fact that Sokol is a creep. It isn't much, but it may have to do for the faithful in Omaha.
Also on Fortune.com:


Couldn't happen to a nicer fella... What comes around goes around....
 
Martha's crime was not insider trading -- it was obstruction of justice and perjury during the investigation of her. A case of the "coverup" being worse than the crime.
 
NJAowner said:
Martha's crime was not insider trading -- it was obstruction of justice and perjury during the investigation of her. A case of the "coverup" being worse than the crime.
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BS-She sold her stock based on her inside info and relationship with Waksal, unless you meant "crime" as in "convicted."
 
jonjuan said:
BS-She sold her stock based on her inside info and relationship with Waksal, unless you meant "crime" as in "convicted."
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..."Stewart was found guilty in March 2004 of conspiracy, obstruction of an agency proceeding, and making false statements to federal investigators, and was sentenced in July 2004 to serve a five month term in a federal correctional facility and a two year period of supervised release (to include five months of electronic monitoring)."...
 
gret said:
..."Stewart was found guilty in March 2004 of conspiracy, obstruction of an agency proceeding, and making false statements to federal investigators, and was sentenced in July 2004 to serve a five month term in a federal correctional facility and a two year period of supervised release (to include five months of electronic monitoring)."...
Click to expand...

And OJ wasn't convicted either. If you don't really believe she actually traded based on inside information, I have a bridge to sell you. Isn't it interesting that not a single wall st. banker has gone to jail from the recent financial crisis? Reason? Their lawyers lawyers have lawyers. :)
 
The Buffett judgment question

Posted by Colin Barr
April 29, 2011 5:48 am

Few can match Warren Buffett as stock picker. But is he a sound judge of character?
It's surely not a question the billionaire Berkshire Hathaway (BRKA) CEO relishes nowadays – not a month after David Sokol (right), his longtime right hand man and presumed successor, was unmasked as a selfish, rule-bending creep.
Mission creep

But however unfair it may seem, the judgment question is one the 80-year-old Buffett won't be able to avoid this weekend. He and Berkshire Vice Chairman Charlie Munger are scheduled to entertain tens of thousands of shareholders in Omaha at the company's annual meeting – where the subject of Buffett's succession plan is always ready fodder for hallway conversation.
Those chats may take on a bit more urgency in the wake of the report Berkshire's audit committee released Wednesday. It details the trading transgressions, evasiveness and general peevishness of Sokol – just two months after he was praised lavishly by Buffett in his annual shareholder letter.
"I can't overstate the breadth and importance of Dave Sokol's achievements," Buffett said in the letter, referring to Sokol's turnaround of Berkshire's NetJets unit.
Sokol's days as a corporate highflier ended abruptly last month, when he quit in an insider trading scandal. While Berkshire fans are hoping the 18-page audit report will put that fiasco in the rearview mirror, it is nonetheless likely to consume quite a bit of Buffett's five-hour question-and-answer session with shareholders Saturday.
Not forgotten will be the way Buffett initially booted the Sokol news. Rather than focusing on Sokol's questionable trades, Buffett's March 30 press release inexplicably led with a quote from a witless Sokol resignation letter that proclaimed he was quitting to spend more time with his family's money. Buffett, incredibly, then went on to applaud Sokol's achievements -- and to announce he was done talking about the matter.
Whatever happened to the guy who promised two decades ago at Salomon Brothers to be ruthless with those who endangered the firm's good name?
"The way they dealt with the news in March was disappointing," says David Rolfe, chief investment officer at Berkshire shareholder Wedgewood Partners in St. Louis. The Sokol episode "put a big dent in Berkshire's reputation, which you know is Buffett's heart and soul."
Of course, most attendees are tried and true Buffett fans, and so they believe the audit report mostly redeemed Buffett, if he had ever fallen. Accordingly, they are focused more on what acquisitions cash-rich Berkshire might land next. Buffett said in his annual report that he is hunting for big game along the lines of Burlington Northern, the railroad Berkshire bought last year that has more than met profit expectations.
"Sokol is going to be the elephant in the room," says Rolfe, "but we are more interested in the elephant gun."
But it's not so easy to gloss over the questions about Buffett's capacity to manage an expanding empire. As the years pile up, that proposition obviously isn't getting any easier. And the succession question still nags, even if Berkshire's bench is acknowledged to be deep in talented people such as reinsurance chief Ajit Jain, Burlington Northern's Matt Rose and MidAmerican Energy's Greg Abel.
The report released Wednesday by Berkshire's audit committee blames Sokol, not Buffett, for violating Berkshire policy. But a review of Sokol's actions certainly doesn't read like a ringing endorsement of Buffett's decision to entrust him with so much responsibility.
Start with Sokol's lunatic choice to bet his career on a conflict-laden stock bet that earned him just a quarter of what he was made in a typical year at Berkshire. That is not what you might describe as the mark of a seasoned leader. But wait, there's more.
Sokol alienated staffers at NetJets and other Berkshire businesses he oversaw. He tried at least twice to quit, in what sounds like the posturing of a prima donna, before claiming improbably on his way out the door that he had no interest in the CEO job anyway. He told CNBC that if he had to do it all over, he would buy the Lubrizol (LZ) stock again -- and just not tell Buffett about the company. This is the guy you want as the steward of your precious corporate trust?
If anything, Buffett should consider himself lucky that Sokol was exposed before he could do too much damage, and breathe a sigh of relief that Berkshire's reins are now likelier to eventually end up in safe hands. We shall soon find out whether the Oracle, for all his business acumen, has the clarity to see it that way himself.
Also on Fortune.com:

Follow me on Twitter @ColinCBarr.
 
jonjuan said:
And OJ wasn't convicted either. If you don't really believe she actually traded based on inside information, I have a bridge to sell you. Isn't it interesting that not a single wall st. banker has gone to jail from the recent financial crisis? Reason? Their lawyers lawyers have lawyers. :)
Click to expand...

OK...I give up! My intellect isn't as good as others and I'm obviously oblivious to facts.
 

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