In his virgin New York Times op-ed column, Joe Nocera de-haloes Berkshire Hathaway’s sainted Warren Buffett over his heir apparent David Sokol’s likely insider trading shenanigans, which have led to Sokol’s resignation.
In a statement, Buffett laid out the facts about Sokol’s stock purchases of Lubrizol, a company Berkshire Hathaway agreed to buy two weeks ago. To give Buffett his due, this is decidedly not what chief executives usually do in this circumstance. That’s why the Oracle of Omaha has such a glowing reputation in the first place. But the statement also contains a sentence that only Buffett would have the chutzpah to write:
“Neither Dave nor I feel his Lubrizol purchases were in any way unlawful.”
The S.E.C. will be the judge of that. But here’s Nocera’s interim judgment on Dave Sokol’s $3 million stock windfall:
How is this not, on its face, evidence of insider trading? A guy buys stock in a company and then talks his boss into buying the company. The fact that his boss is Warren Buffett makes it even more “material,” to use the word the S.E.C. favors when it investigates insider trading. If a company executive trades on material information, knowing that he is privy to stock-moving news that hasn’t yet been divulged to other shareholders, he is likely to be committing a crime. When Warren Buffett buys a company, the stock price goes up. Everybody knows that — including, presumably, Dave Sokol.
Presumably, Joe Nocera’s stock has just gone up too.