Sokol's resignation clouds Berkshire's succession plan, while his Lubrizol trades tarnish to some extent the firm's legacy of strong ethical behavior.
In a surprising announcement, Berkshire Hathaway
If that weren't enough, Buffett's disclosure that Sokol had purchased upward of $10 million worth of Lubrizol
It wasn't even nine months ago that Buffett was calling on his managers to "zealously guard Berkshire's reputation." In his biennial letter to Berkshire's managers, Buffett said, "We can afford to lose money--even a lot of money. But we can't afford to lose reputation--even a shred of reputation."
It looks as if Sokol didn't get the memo, because his purchase of Lubrizol shares in early January, while not necessarily illegal, does give the appearance of impropriety. With Berkshire paying $135 per share for Lubrizol earlier this month, Sokol probably made more than $3 million on the 96,000 shares he purchased at the start of the year. This was something that was likely to raise serious questions when Berkshire's proxy came out, potentially landing the story of how one of Berkshire's key lieutenants profited handsomely from Berkshire's purchase of Lubrizol on the front page of a national newspaper (something that Buffett had cautioned his managers to avoid on countless occasions). Perhaps this is why Buffett accepted Sokol's resignation, which was apparently his third attempt to leave Berkshire over the past couple of years.