Colin Barr

Following the money in banking, economics, and Washington

There oughta be a law, Sokol edition

April 5, 2011: 9:55 AM ET

David Sokol probably isn't in trouble with the law – but maybe he should be.

That's the verdict rendered by some business types in a poll taken this week. The Argyle Executive Forum, a New York-based business networking group, said a survey Monday of more than 800 members shows only a quarter of respondents believe Sokol's recent purchases of Lubrizol (LZ) stock were illegal. A bigger group -- some 36% of voters -- disagrees with the notion that Sokol broke insider trading laws.

A highflier no more

But 47% say that if his conduct was legal, "the law should be changed" and the behavior made illegal.

Sokol, long seen (by the press, at least) as the heir-apparent to billionaire Warren Buffett atop Berkshire Hathaway (BRKA), quit last week after failing to fully disclose his trading in Lubrizol stock. Berkshire agreed last month to buy the lubricants company for $9 billion in a deal that bankers at Citigroup pitched to Sokol in December.

Buffett announced Sokol's departure in a press release last Wednesday that asserted that "neither Dave nor I feel his Lubrizol purchases were in any way unlawful." The comment has drawn harsh scrutiny in light of Buffett's claim two decades ago that he would act ruthlessly when any at Berkshire acted in a way that damaged the company's reputation.

While the Sokol mess surely hasn't helped Buffett's image, it has cast Sokol in an entirely new light. If he was previously seen as a hard-charging if abrasive executive, stories published in the wake of the affair focus on his selfishness – a view that Sokol himself did little to discourage with his disastrous performance on CNBC last week.

Asked if he had done anything wrong, Sokol said no and claimed, incredibly, that if he had to do it all over he would simply have bought the Lubrizol stock for his own account and not told Buffett about the company's potential as an acquisition for Berkshire. This despite the fact that the Citi bankers pitched Sokol on Lubrizol not as an individual but as an agent for Berkshire.

So, no surprise, the view of Sokol as someone who will do damn near anything to further his own interests is pretty well entrenched by now. More than three in four Argyle voters said Sokol's actions in the Lubrizol case were unethical. But that, rather than any new wrinkle in insider trading laws, is probably the best response we can hope for to this ridiculous episode.

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About This Author
Colin Barr
Colin Barr
Senior Writer, Fortune

Colin Barr has covered finance for Fortune.com since November 2007. Previously he was a writer and editor for TheStreet.com, winning a 2006 Society of American Business Editors and Writers award for "The Five Dumbest Things on Wall Street," and for Dow Jones Newswires. He is a 1991 graduate of Penn State and lives in Port Washington, N.Y., with his wife Meena Bose and their two kids.

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