Billionaire investor Warren Buffett has long enjoyed a sterling reputation as the "honest oracle" of high finance. But even some former admirers are expressing disgust after suspicions of insider trading sank David Sokol, the man being groomed to succeed the 80-year-old Buffett at Berkshire Hathaway. Will investors sour on Buffett, too?
Shareholders will want answers: Berkshire Hathaway's annual meeting is usually a lovefest, says Andrew Ross Sorkin in The New York Times, but the 2011 gathering, coming up this month, will be more like an "inquisition." The bottom line is that Sokol bought a pile of stock in Lubrizol, a chemicals company, shortly before Berskshire Hathaway bought it. Buffett isn't shy about calling out wrongdoing elsewhere; his shareholders will want to know why he let's this kind of thing go on right under his nose.
"Buffett's ruthlessness is oddly absent on Sokol"
Buffett is supposed to be better than this: The stunt Sokol pulled is known on Wall Street as "front-running," says Bloomberg News columnist Alice Schroeder, "and everybody knows that it is wrong." When news of Berkshire's acquisition broke, Lubrizol's stock spiked, and Sokol pocketed a cool $3 million. But instead of standing up for principle and condemning Sokol, Buffett "gave him a pat on the back on the way out the door." He had a chance to live up to his reputation for "moral courage," but he blew it.
"Buffett misses chance to show moral courage"
The Oracle of Omaha will recover. Sokol won't: Buffett is rightly facing "harsh scrutiny" for appearing to shrug this off, says Colin Barr at Fortune. After all, he once promised to be ruthless if he ever caught someone damaging his company's reputation. But Buffett says his protege did nothing illegal, and most business leaders appear to agree. So while this "mess surely hasn't helped Buffett's image," the only person whose reputation is truly ruined is Sokol.
"There oughta be a law, Sokol edition"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- Syrian women know how to defeat ISIS
- The U.S. Marines are developing laser weapons. Here's why.
- 3 horrific inaccuracies in Homeland's depiction of Islamabad
- 10 things you need to know today: October 21, 2014
- The one thing the New Atheists get right about religion
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- Will Kobani be ISIS's Waterloo?
- Gamergate has backfired spectacularly on its nincompoop perpetrators
- Why the Supreme Court is allowing Texas to hold an unconstitutional election
- 43 TV shows to watch in 2014
Subscribe to the Week