Posted on April 26th, 2011
Berkshire Hathaway shareholder Mason Kirby filed a lawsuit last week against Berkshire Hathaway, company executives Warren Buffett and Charles Munger and other officers and directors, including director Bill Gates, as well as former NetJets chairman and CEO David Sokol. The complaint seeks “to remedy defendants’ breaches of fiduciary duties and obtain disgorgement of profits unlawfully obtained and recovery for damages caused to Berkshire, such as to its reputation and goodwill.” Sokol resigned from his job at NetJets and two other Berkshire Hathaway companies on March 28. On March 30, Buffett released a statement outlining Sokol’s purchase of shares of Lubrizol and his subsequent discussing with Buffett about Berkshire’s purchasing Lubrizol. The value of Sokol’s shares reportedly climbed by $3 million after Berkshire Hathaway announced the Lubrizol acquisition. According to the complaint, Buffett and Sokol put Berkshire Hathaway “at risk for a potential adverse SEC action and negative credit rating.” The complaint alleges that Sokol was trading based on “material information” as defined by Berkshire. “Sokol knew Berkshire ‘may be involved in a significant transaction’ with Lubrizol and traded based on that information. This is precisely the type of trade that is expressly prohibited’ by the [Berkshire Hathaway] Policy,” according to the complaint.
Tags: netjets, berkshire hathaway