Posted on 20 Apr 2011
A shareholder is suing Berkshire Hathaway Inc. and Chief Executive Officer Warren Buffett over trades in Lubrizol Corp. by former Berkshire manager David Sokol.
Suing to recover damages for the company, Berkshire investor Mason Kirby contends that Sokol, also a defendant, hurt the firm by taking a stake in Lubrizol before recommending to Buffett that Berkshire buy the company, according to papers made public today in Delaware Chancery Court in Wilmington.
“Sokol knew that Buffett would closely consider and likely take his recommendation,” Kirby said. “As a result of Sokol’s unethical behavior, Berkshire suffered significant reputational losses and other damages.”
Sokol bought 96,060 shares of Lubrizol in early January before recommending that Omaha, Nebraska-based Berkshire acquire the company, Buffett said in a March statement announcing Sokol’s resignation.
Buffett nor Sokol have commented about the suit.
Kirby alleges that Buffett and Sokol, “working in concert,” violated duties to shareholders “and put the company at risk for a potential adverse SEC action and negative credit rating.”