Warren Buffet, the most successful investor ever and his high ethical standards have hit a tough spot with the dealings of his alleged successor David Sokol. Sokol, who just announced his retirement from Berkshire Hathaway on Wednesday, purchased $10 million in shares of Lubrizol in January. Sokol, long rumored to be the top candidate to succeed Buffet when he leaves the company. This was during the period when Berkshire Hathaway was in discussions to purchase the company. Sokol is estimated to have made about $2.98 million in three months from the purchase to sale of the shares.
The timing of his resignation, sale of the shares of Lubrizol and the SEC filings of the transactions seems very suspicious. Sokol claims that the retirement is for family reasons but I think there is more to the story.
An article that I read on SmartMoney written by, James B. Stewart, does a great job explaining the entire process of the knowledge of possibly buying the company, when Buffet found out that he owned shares, and to approval by the Berkshire board.
This clearly demonstrates a lack of transparency and conflict of interest within Sokol. Sokol clearly has a conflict of interest with his personal finances and the well being of Berkshire.
I do not know the rules of insider trading to make a decisions on whether or not this would fall under that category. This is clearly something that any company should not accept and Buffet should make it clear to all current employees that this is not something that should exist in Berkshire.
http://www.smartmoney.com/investing/stocks/why-is-buffett-whitewashing-sokols-exit-1301690748602/
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