Berkshire Hathaway just threw David Sokol under the bus.
The company just released a huge report that says Sokol’s purchase of Lubrizol stock before the deal was announced that Berkshire Hathaway would buy the company violated company policy.
The purpose of the report is to explain exactly what happened and evidently, also to place blame solely on Sokol (which is probably where it should be).
But Buffett knew that Sokol owned Lubrizol stock, and some people have attached importance to that fact.
This is the main complaint as written in the release:
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.
His misleadingly incomplete disclosures to Berkshire Hathaway senior management concerning those purchases violated the duty of candor he owed the Company.
Sokol’s violations concern his lack of disclosure on 4 issues, says the report:
- Sokol should have disclosed when he bought Lubrizol and how much Lubrizol stock he bought. Buffett says that Sokol disclosed just the fact that he owned it, as a “passing remark.”
- Sokol did not mention that he bought the shares after talking about Lubrizol with Citi bankers. During that discussion he narrowed down a list of companies that he was investigating for investment potential from 18 to 1.
- Sokol did not mention that he bought Lubrizol shares after asked Citi bankers for a meeting with Lubrizol’s CEO to discuss the Berkshire deal
- Sokol did not disclose that he bought shares after Lubrizol’s CEO had said that he was interested in meeting to discuss the deal.
More coming. Click here to read the whole report.