Former Berkshire Hathaway executive David Sokol deliberately misled Warren Buffett when pitching an investment to him, the company’s board concluded in a scathing report that may add fuel to a pending SEC probe of Buffett’s one-time heir apparent.
The board said it may sue Sokol to recover the $3 million of trading profit he made when Berkshire bought chemicals company Lubrizol Corp and could seek damages from him for harm to the company’s reputation. The company will cooperate with any government probe in the matter as well. The US Securities and Exchange Commission is probing Sokol, a person familiar with the matter said.
Sokol’s high-profile attorney disputed the board’s report and said his client is “a man of uncommon rectitude and probity”.
“I have known Sokol and have represented his companies in business litigation since the mid 1980s,” said Barry Levine of the Washington firm Dickstein Shapiro. “He would not, and did not, trade improperly, nor did he violate any fair reading of the Berkshire Hathaway policies.”
Levine said in a statement that Sokol had been studying Lubrizol for personal investment since the summer of 2010 and such investments are specifically allowed by his employment agreement.
“Buffett was told twice, not once, about Sokol’s ownership of Lubrizol stock before Buffett engaged in any discussions with Lubrizol,” Levine said.