Wednesday, Dec. 07, 2011

Berkshire Hathaway's Insider-Trading Scandal

When you are in line for the one of the most coveted jobs in corporate America, best to stay away from your brokerage account. In March, David Sokol, who was widely considered a leading contender to replace Warren Buffett at the helm of Berkshire Hathaway, resigned after admitting that he had bought shares of chemical company Lubrizol just two months before the company agreed to be acquired by Berkshire. Berkshire's audit committee released a report concluding that Sokol had broken company rules and misled Berkshire officials about his stake in Lubrizol, which he denied. The incident was a black eye for good guy Buffett, who was criticized for backing Sokol at the time of his resignation. Since then, Berkshire has said it might sue Sokol over the violations. Buffett admitted he could have handled the situation better.