Berkshire will cooperate with any government investigations related to Sokol’s Lubrizol transactions and weigh suing the former manager to recover his trading profits, according to a report from Omaha, Nebraska-based Berkshire’s audit committee. Buffett had said March 30 in announcing Sokol’s departure that he didn’t believe the trades were unlawful. “They’re throwing Sokol under the bus,” said Stephen Bainbridge, a professor at the UCLA School of Law who has written and taught about corporate governance. "His misleadingly incomplete disclosures to Berkshire Hathaway senior management concerning those purchases violated the duty of candor he owed to the company," the board said -- noting that an executive's duty of candor was part of the duty of loyalty under Delaware law where Berkshire is incorporated. "He would not, and did not, trade improperly, nor did he violate any fair reading of the Berkshire Hathaway policies." "This report makes it clearly look like this was not Warren Buffett's fault, this was Sokol's fault," said Michael Yoshikami, chief executive of wealth manager YCMNET Advisors and a Berkshire shareholder. Close David Sokol, former executive of Berkshire Hathaway Inc., speaks during an interview in... Read More Close Open Photographer: Jonathan Fickies/Bloomberg David Sokol, former executive of Berkshire Hathaway Inc., speaks during an interview in New York on Aug. 16, 2010. The report is an unusual statement from a board that has historically been very close to Buffett, who is CEO and chairman. Sokol’s investment may have given him a profit of about $3 million, according to Buffett’s disclosure and data compiled by Bloomberg.
– Warren Buffett's former heir apparent David Sokol misled his boss and violated insider-trading rules when he bought shares in Lubrizol and then recommended Berkshire Hathaway buy it, Berkshire's board has concluded. A scathing report from the board portrays Buffett as a victim of Sokol's deception and says the company may sue to recover the $3 million Sokol made from the deal, Reuters reports. Sokol—who insists he did nothing wrong—has resigned from the company and is the target of an SEC probe, which will gain ammunition from the board's report. "They're throwing Sokol under the bus," a corporate governance experts tells Bloomberg. Buffett is facing questions about his oversight of managers, but analysts believe the board's report will take some pressure off the billionaire investor ahead of Berkshire's annual meeting this weekend.