An investor in Berkshire Hathaway Inc. (NYSE:BRK.A) shares filed a lawsuit also against David Sokol and others over alleged breaches of fiduciary duties in connection with the acquisition of Lubrizol Corp by Berkshire Hathaway Inc.
According to the complaint the plaintiff alleges that David L Sokol, a former Berkshire employee and key lieutenant to Warren E. Buffett, Berkshire Hathaway’s CEO, used his position of influcent to profit for himself at the expense of Berkshire Hathaway Inc. and as a result of David L Sokol’s unethical behavior Berkshire Hathaway Inc suffered significant reputational losses and other damages.

The plaintiff claims that David L Sokol purchased a significant holding in The Lubrizol Corporation prior to recommending to Buffett that Berkshire acquire Lubrizol.

The plaintiff says that David L Sokol knew that Warren Buffett would closely consider and likely take his recommendation regarding an acquisition of Lubrizol Corp. and armed with this knowledge, David L Sokol purchased 2,300 shares of Lubrizol which he sold one week later. After selling his initial holding, David L Sokol purchased 96,060 shares of Lubrizol and after placing this buy order for the 96,060 shares, he approached Warren Buffett about acquiring Lubrizol Corp so the lawsuit. The plaintiff claims that Warren Buffett was initially unimpressed with the potential acquisition of Lubrizol Corp, but David L Sokol continued to champion the Lubrizol acquisition idea to Warren Buffett.
According the information publicly disseminated by Berkshire Hathaway, Warren Buffett and/or David L. Sokol, Sokol purportedly informed Warren Buffett that he was a Lubrizol stockholder, so the plaintiff. However, so the complaint, according to published reports, Warren Buffett failed to inquire further regarding the timing and extent of David L. Sokol’s purchases.

The plaintiff alleges that both David Sokol’s purchases and Warren Buffett’s failure to act in response to David L. Sokol’s admission that he held Lubrizol stock violated Company’s corporate policies.
Ultimately, David Sokol persuaded Warren Buffett to acquire Lubrizol Corp, so the plaintiff.

In fact, on Monday, March 14, 2011, The Lubrizol Corporation (NYSE: LZ) and Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) announced an agreement for Berkshire Hathaway to acquire 100% of outstanding Lubrizol Corp. shares for $135 per share in an all-cash transaction valued at approximately $9.7 billion including approximately $0.7 billion in net debt.

As a result of the acquisition, David Sokol’s personal Lubrizol Corp. holdings increased in value to $13 million.

Shortly after the acquisition was announced, Warren Buffett and David L. Sokol disclosed that David L. Sokol had resigned from Berkshire Hathaway Inc