Possible Buffett Successor Quits

David Sokol, chairman of several subsidiaries of Omaha, Neb.-based Berkshire Hathaway, and widely regarded and a possible successor to current Chairman and CEO Warren Buffett, has resigned.

In a letter posted on the company's Web site, Buffett said he accepted Sokol’s resignation after learning that Sokol in January purchased 96,060 shares of Lubrizol Corp. prior to that firm’s acquisition by Berkshire in March. In the letter, Buffett acknowledges that Sokol first brought Lubrizol to attention as an acquisition target in early January. “Though the offer to purchase was entirely my decision, supported by Berkshire’s Board on March 13, it would not have occurred without Dave’s early efforts,” the letter states. “Dave’s purchases were made before he had discussed Lubrizol with me and with no knowledge of how I might react to his idea. In addition, of course, he did not know what Lubrizol’s reaction would be if I developed an interest. Furthermore, he knew he would have no voice in Berkshire’s decision once he suggested the idea; it would be up to me and Charlie Munger, subject to ratification by the Berkshire Board of which Dave is not a member.”

Based on difference in price he paid for Lubrizol shares in January and the price at which Berkshire agreed to buy the company, Sokol would have made nearly $3 million in profits if he had sold the shares. While Buffett maintains that the stock purchases were not “in any way unlawful” he did accept Sokol’s offer to resign.