David Sokol, the man widely seen as the heir to Warren Buffett's throne, went on CNBC's Squawk Box this morning to discuss his resignation from Berkshire Hathaway. Buffett shocked the financial world yesterday afternoon by announcing Sokol's departure — along with a revelation that Berkshire Hathaway spent $9 billion to acquire Lubrizol, a lubricant manufacturer, on Sokol's urging two months after Sokol personally purchased 96,060 Lubrizol shares. Amid rumors of impropriety, Buffett reassured investors,
“Neither Dave nor I feel his Lubrizol purchases were in any way unlawful. He has told me that they were not a factor in his decision to resign.”
But Buffett, who is now 80 years old and sans succession plan, also probably wants to avoid the wrong kind of attention.
Sokol didn't seem to be as worried about that when he appeared solo on Squawk Box this morning. Financial types furiously advised Sokol to get himself a securities lawyer — and Buffett to get a compliance department. "Obviously, it makes for better TV if Sokol doesn't have a lawyer... but it also makes for better evidence if charges r ever filed," tweeted Fortune.com's Dan Primack. After hearing Sokol's interview, it's easy to see why.
Asked if he did anything illegal or immoral, Sokol said he did not, adding, "I didn't have any inside information." Then Sokol said he didn't see anything wrong with an executive investing family capital in a company that Berkshire had no knowledge of [ed note: *before* the deal]. Sokol also noted that he has not heard from the (newly investigation-happy) SEC. But it gets worse. Sokol volunteered that in retrospect, he would have bought the Lubrizol stock but not mentioned the company to Buffett, emphasizing that he never thought his boss would be interested.
Sokol's reasoning doesn't explain why the extent of the stock purchase wasn't disclosed while he continued to pitch Berkshire on Lubrizol and Buffet's interest was piqued. Now who would do that to a nice old man who probably wanted to give you his $250 billion company ... at some point, since he isn't interested in stepping down yet, and urges you to make your grandchildren paupers.
LIVE BLOG - David Sokol's Live Interview on CNBC's Squawk Box [CNBC]
Full Dave Sokol resignation statement by Warren Buffett [Telegraph UK]
Abrupt Exit for a Top Deputy to Warren Buffett [Dealbook/NYT]