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Berkshire Coverage

Berkshire Board Report: Sokol Violated Company Ethics

Berkshire audit committee report says Sokol's Lubrizol trades violated company policies.

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Berkshire Hathaway's audit committee released a report Wednesday stating that trades made by Buffett's former top lieutenant David Sokol violated the company's ethics policy.

Sokol resigned in late March, and at the same time Buffett disclosed that Sokol had purchased shares of Lubrizol prior to Berkshire's announced acquisition of the firm. Sokol first bought shares in December 2010 (a position he sold later in the same month) and then he bought shares again in January 2011. Both purchases occurred before he pitched the possible acquisition idea to Buffett, according to Buffett's press release on the matter. However, the firm had been on Sokol's radar as a possible acquisition target since the fall of 2010, when it was presented to Sokol on a short-list of chemical-industry acquisition candidates generated by Citi investment bankers at Sokol's request.

Jason Stipp does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.