Berkshire Hathaway Inc. and Chief Executive Officer Warren Buffett were sued by a shareholder over trades in Lubrizol Corp. by former Berkshire manager David Sokol.
Berkshire investor Mason Kirby, suing to recover damages for the company, contends that Sokol, also a defendant, hurt the firm by taking a stake in Lubrizol before recommending to Buffett that Berkshire buy the company, according to papers made public today in Delaware Chancery Court in Wilmington.
“Sokol knew that Buffett would closely consider and likely take his recommendation,” Kirby said. “As a result of Sokol’s unethical behavior, Berkshire suffered significant reputational losses and other damages.”
Sokol bought 96,060 shares of Lubrizol in early January before recommending that Omaha, Nebraska-based Berkshire acquire the company, Buffett said in a March statement announcing Sokol’s resignation.
Buffett didn’t immediately respond to a request for comment e-mailed to his assistant, Carrie Kizer.
Ann Thelen, a spokeswoman for Berkshire’s MidAmerican Energy Holdings Co., where Sokol remains chairman until April 21, didn’t immediately return a call seeking comment from Sokol.
Kirby alleges that Buffett and Sokol, “working in concert,” violated duties to shareholders “and put the company at risk for a potential adverse SEC action and negative credit rating.”
The case is Kirby v. Sokol, CA6392, Delaware Chancery Court (Wilmington).