Tags: Berkshire Hathaway | Sokol Resigns

Buffett Surprised by Sokol's Sudden Departure

Thursday, 31 Mar 2011 07:46 AM

David Sokol, a contender to replace legendary investor Warren Buffett at the helm of Berkshire Hathaway, has resigned amid revelations surrounding a stock trade, surprising his mentor.

Sokol bought $10 million in shares of chemicals producer Lubrizol, a company Berkshire agreed to buy at Sokol's suggestion.

Both Buffett and Sokol say no laws were broken, and that the resignation was due to family reasons.

Sokol told The Wall Street Journal that said his resignation "had absolutely nothing to do" with Lubrizol, and said the company elected to disclose his trades before they appeared in a proxy statement in the coming weeks.

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David Sokol (AP Photo)
Resigning "was 100% my decision," Sokol told the Journal. He said he had contemplated leaving Berkshire for the past three years and had told Buffett that he wanted to hand over management of the Berkshire subsidiaries he ran "when the timing was right."

Nevertheless, Sokol's resignation letter came as a "total surprise" says Buffett, according to the Associated Press.

Sokol had reportedly expressed interest in resigning in the past, although Buffett convinced him to stay on.

Buffett accepted Sokol's resignation this time.

"Dave's contributions have been extraordinary," Buffett says.

Transparency has always been a priority for the legendary investor, and continues to be so today, investors say.

"Obviously Warren Buffett prides himself on transparency and this would not appear to be transparent," says Berkshire shareholder  Michael Yoshikami of YCMNET Advisors in California, according to Reuters.

"It's surprising and always amazes me these types of events occur because it just seems so unnecessary."

Meanwhile, the jury is still out on whether Sokol will be liable in court for his actions.

"He could be," says C. Evan Stewart, managing partner at the Zuckerman Spaeder law firm in New York, which concentrates on securities litigation, according to Reuters.

"At a minimum he showed extremely bad judgment in not disclosing to Mr. Buffett that he had taken a fairly significant position in the company a week before he pitched the benefits of the company to Mr. Buffett."

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David Sokol, a contender to replace legendary investor Warren Buffett at the helm of Berkshire Hathaway, has resigned amid revelations surrounding a stock trade, surprising his mentor. Sokolbought $10 million in shares of chemicals producer Lubrizol, a company Berkshire...
Berkshire Hathaway,Sokol Resigns
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2011-46-31
Thursday, 31 Mar 2011 07:46 AM
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