Lawsuit Seeks Sokol Remedy from Berkshire Hathaway

AINalerts » April 21, 2011
April 21, 2011, 10:15 AM

Berkshire Hathaway shareholder Mason Kirby filed a lawsuit on Monday against Berkshire Hathaway, company executives Warren Buffett and Charles Munger and other officers and directors, including director Bill Gates, as well as former NetJets chairman and CEO David Sokol. The complaint seeks “to remedy defendants’ breaches of fiduciary duties and obtain disgorgement of profits unlawfully obtained and recovery for damages caused to Berkshire, such as to its reputation and goodwill.” Sokol resigned from his job at NetJets and two other Berkshire Hathaway companies on March 28. On March 30, Buffett released a statement outlining Sokol’s purchase of shares of Lubrizol and his subsequent recommendation to Buffett that Berkshire purchase Lubrizol. The value of Sokol’s shares reportedly climbed by $3 million after Berkshire Hathaway announced the Lubrizol acquisition. According to the complaint, Buffett and Sokol put Berkshire Hathaway “at risk for a potential adverse SEC action and negative credit rating.” The complaint alleges that Sokol was trading based on “material information” as defined by Berkshire. “Sokol knew Berkshire ‘may be involved in a significant transaction’ with Lubrizol and traded based on that information. This is precisely the type of trade that is expressly prohibited’ by the [Berkshire Hathaway] Policy,” according to the complaint.

Share this...

Please Register

In order to leave comments you will now need to be a registered user. This change in policy is to protect our site from an increased number of spam comments. Additionally, in the near future you will be able to better manage your AIN subscriptions via this registration system. If you already have an account, click here to log in. Otherwise, click here to register.