What is galling about Buffett’s stance is not the recitation of facts, but the way they were spun to make Sokol’s actions look benign. “Dave’s purchases were made before he had discussed Lubrizol with me and with no knowledge of how I might react to his idea,” he writes. “In addition, of course, he did not know what Lubrizol’s reaction would be if I developed an interest.”
I’m sorry, but that’s ridiculous. Since when do companies turn their backs on Buffett? Besides, Sokol knew that his idea would get a serious hearing; he was so esteemed by Buffett that he was rumored to be the Great Man’s successor. When you strip away the Buffett gloss, the facts are harsh. Sokol (a) brought the deal to Buffett, (b) brokered between Buffett and Hambrick, and (c) persuaded Buffett to pull the trigger. All while owning 96,000 shares he’d bought a few weeks earlier. (From Buffett, Excuses, Excuses, Excuses – NYTimes.com, 4/2/2011)
I’m with Joe Nocera, the SEC should investigate Sokol for insider trading. I’m glad Sokol out of Berkshire Hathaway, one of the stocks in my portfolio. Buffett shouldn’t be making excuses; he should be tightening up his corporate governance standards and clarifying when staff can and cannot make stock purchases on their own.
Comments are closed.