Reply #26: Sokol Acted Unethically, Warren, Just Say It

[xchrom]

http://blogs.hbr.org/cs/2011/04/sokol_acted_unethically_warren.html

In announcing the resignation of David Sokol, Berkshire Hathaway executive and possible successor, Warren Buffett said on March 30th, "Neither Dave nor I feel his Lubrizol purchases were in any way unlawful."

Buffett should have gone on to say, "I do, however, think David Sokol acted unethically." But he didn't, and a firestorm of questions about Buffett, Sokol, and Berkshire governance has ensued.

As every business-savvy reader now knows, the "Lubrizol purchases" involved Sokol's acquisition of about $10 million of Lubrizol shares on January 5-7, 2011; his recommendation to Buffett that Berkshire buy the company on about January 14th and then again on January 25th; and Berkshire's decision to buy Lubrizol announced in mid-March with a resulting increase of $3 million in Sokol's Lubrizol holdings.

According to Buffet's March 30th statement, "In our first talk about Lubrizol, Dave mentioned that he owned stock in the company. It was a passing remark and I did not ask him about the date of his purchase or the extent of his holdings."