Sokol's Lawyer Fires Back at Berkshire Hathaway

David Sokol's lawyer has fired back at Berkshire Hathaway for its report on Sokol. I suspect that this is the reason Buffett, in his original press release, soft-pedaled what Sokol did. Buffett knows Sokol is a fighter and didn't really want to get into a wrestling match with him. It's only after it became apparent that scrutiny of Sokol's activities weren't going to go away that Buffett fed Sokol to the wolves.

This looks to me like a real high stakes game. Sokol probably understands Buffett's operation better than anyone outside of Charlie Munger. Will he attempt to bloody Buffett, now that Buffett has cut the cord? In the statement from Sokol, it appears that Sokol is saying that Buffett is lying and that Sokol told Buffett about his position, not once, but twice.

Here's the statement from Sokol's lawyer:

Full statement of Barry Wm. Levine, attorney for David Sokol

I am profoundly disappointed that the Audit Committee of Berkshire Hathaway would authorize the issuance of its report to the public without the care and decency to ask even a single question of Mr. Sokol. Mr. Sokol had been associated with the Berkshire Hathaway companies for 11 years. During this time, his indefatigable efforts helped create enormous value for the Berkshire shareholders. He deserved better. While I take issue with much of the Committee’s report, I briefly make the following points. If the Audit Committee had asked, it would have learned that:

•Mr. Sokol had been studying Lubrizol for personal investment since the summer of 2010; such investments are specifically allowed by his employment agreement.

•Mr. Buffett was told twice, not once, about Mr. Sokol’s ownership of Lubrizol stock before Mr. Buffett engaged in any discussions with Lubrizol.

•Contrary to the Audit Committee’s statement, Mr. Sokol’s Lubrizol shares were not acquired pursuant to a “100,000 limit order.” Rather, they were purchased as a result of several limit orders, over a period of days, at specified prices, for the day only, in order to acquire the stock at low prices. At that time, Mr. Sokol had no reason to anticipate that Mr. Buffett would have any interest whatsoever in Lubrizol.

I have known Mr. Sokol and have represented his companies in business litigation since the mid 1980s. I know him to be a man of uncommon rectitude and probity. He would not, and did not, trade improperly, nor did he violate any fair reading of the Berkshire Hathaway policies.

If Buffett can't get to the SEC to stop the Sokol investigation, this could get real ugly.