Posted on 03/30/2011 4:29:17 PM PDT by Lazlo in PA
In a very surprise move, a longtime lieutenant of Warren Buffett, David Sokol, resigned from his position at Buffett’s Berkshire Hathaway. Sokol had been considered a possible successor for Buffett’s post as CEO of Berkshire Hathaway.
Buffett also dropped a bombshell in a letter about Sokol: he said Sokol had purchased shares of Lubrizol, a specialty chemicals company which Berkshire announced it is buying, before Sokol convinced Buffett on the merits of the deal.
(Excerpt) Read more at blogs.wsj.com ...
As I understand it, the timeline was such that this was just unethical and not illegal. I’m sure there will be an SEC investigation, so we should see ‘proof’ thru that. I have none, but I also know of none to contradict my understanding.
I agree with you wholeheartedly on the “happens all the time” point. Some times the situation is illegal, some just unethical, and some totally above-board.
This appears to be the mid-case.
Read Buffett’s letter. This was the third time this guy did this and Buffett had no problem with it!!
Yep. That is an excellent point.
These guys always look like they could wear a prison suit very well. ....or thugs from the mafia....called “Investors” I call most of them crooks in sheeps clothing.
Bingo. I have never thought Warren Buffet was this lovably successful furball stock marketeer he fobs himself off to be.
Recent stock market heros mostly got there on timing schemes. In other words, they have lightening fast keyboard fingers. Got rich without providing any value added to a stock’s value. I give you NY’s Bloomberg and NJ’s Corzine as cases in point.
Timing schemes should be outlawed.
I would imagine that insider trading happens CONSTANTLY.
How could it not happen? It is just a matter of WHO gets caught.
Add to that the members of congress who own stock and are in a position to make laws that will affect the value of that stock! Talk about a conflict of interest. No wonder a senator is often willing to spend millions of his or her own money for a job that pays $175K a year (um, in reported income).
I have the same impression of him. Whether it was his back room deals with politicians to do his "asbestos" deals or his do as I say, not as I do with his private jet firm. He is always doing shady things making extra special care in looking like this simple old stalwart of propriety and honesty. This is just the first time someone has actually caught Buffett in their real business model. Lie, cheat, bribe till you make your buck. That is why this guy is still cheerleading Obummer even after all his proclamations failed. He needs protection from the Pres.
“I’ve never understood the fascination with Buffet and Berkshire Hathaway.”
Becoming the most successful investor and richest man in the world gets peoples attention. 22% per year compounded over 40 years is pretty good.
Yes, its mostly (but not totally) Graham-Dodd investing, but I think the low dividends are due to his being able to find better uses of the money via re-investment.
“Mr. Sokol’s interest in Lubrizol began after Citigroup bankers presented a list of “possible transactions” to him last fall, according to an SEC filing released Friday by Lubrizol. On Dec. 13, Mr. Sokol and the bankers met to discuss the list, and he expressed interest in Lubrizol, according to the filing.
Mr. Sokol asked Citigroup to relay to Lubrizol CEO James Hambrick his interest in meeting to discuss Berkshire and Lubrizol.
Mr. Sokol made his first personal purchase of Lubrizol shares the next day, buying 2,300 shares, according to Wednesday’s statement. He sold the shares a week later, it said.
On Jan. 5, 6 and 7, Mr. Sokol bought 96,060 shares of Lubrizol, based on an order he placed to buy 100,000 shares at up to $104 a share, the statement said. On the 6th, the Lubrizol board met to discuss Berkshire’s interest, the Lubrizol filing said.
Mr. Sokol held his shares as he talked with Mr. Hambrick on Jan. 14. Their conversation was generally about “corporate cultures and philosophies of both Berkshire Hathaway and Lubrizol,” according to the filing. The two men arranged to meet in person on Jan. 25.”
I think the SEC has a case.
mmm mmm
“I think the SEC has a case.”
You could be right, but I’d bet against it. BH only buys a small handful of companies like Lubrizoil every year, and someone like Sokol wouldn’t have been doing his job if he wasn’t pitching at least one idea every month. His take-up rate is probably 1 in 6 or so. He wouldn’t have had any idea if the BH board would have accepted the acq or not. And the Dec buy/sell seems to me like even he was unsure, tho’ he convinced himself later obviously. But the Dec trade may have been a tax thing - who knows?
Again, we’ll see, but I’d bet you two FR$ on the outcome, if FR$ existed...
HUGE violation of corporate ethics and most likely policies.
1.Buy the stock.
2.Convince your company to buy the stock, which will most likely inflate the price.
3.Profit!
He had a duty to tell the company that he was buying or owned the stock.
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