The 5 Dumbest Things on Wall Street This Week: Jan. 11
5. Sokol's Low Blow
Say it ain't so, Sokol! We knew you were a shady character, but we didn't think you were this dark.
One-time Berkshire Hathaway (BRK-A) big shot David Sokol mocked his former mentor, Warren Buffett, last Friday, scorning the billionaire investor after regulators cleared him of any wrongdoing regarding the trade that led to his March 2011 resignation. Sokol, in case you've forgotten, was once Buffett's golden boy, as well as a leading candidate to succeed the octogenarian as chief of the $232 billion dollar holding company. He fell from grace, however, after it was revealed he personally bought a boatload of Lubrizol shares before pitching the chemical maker to Buffett as an ideal investment for Berkshire.
Buffett initially backed Sokol after the Lubrizol trade blew up in the press, saying Sokol's actions were not "in any way unlawful." Nevertheless, he eventually turned on his protégé after digging deeper into the details of Sokol's shenanigans."I will never understand why Mr. Buffett chose to hurt my family in such a way, but given that he is rapidly approaching his judgement [sic] day, I will leave his verdict to a higher power," Sokol wrote to The Wall Street Journal. A "higher power"? That's a sick thing to say. We may have had our own issues with Buffett's behavior in the past, but that's way beyond the pale. Moreover, the notion that Sokol's family was harmed in any manner, well, that's plain ludicrous. Sokol pocketed nearly $3 million on his $10 million investment when Berkshire agreed to buy Lubrizol only a few months after he brought it to Buffett's attention. Sokol's net worth -- thanks to Buffett's benevolence -- is reportedly well over a hundred million dollars. As for why the SEC dropped the investigation, we can only imagine it couldn't concretely prove that Sokol knew Berkshire was going to buy Lubrizol before he personally dipped his big toe in. And as to what Warren Buffett ever saw in this shyster in the first place? Clearly, the Oracle of Omaha had a pretty severe blind spot in this case.
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