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More Lies At Berkshire: Revised Proxy Reveals Previously Undisclosed Contact Between Sokol And Lubrizol Bankers Ahead Of Stock Purchase

Tyler Durden's picture




 

The story that continues to expose the dirty laundry of Berkshire, much the Octogenarian of Omaha's chagrin, refuses to go away. According to the a newly released version of the Lubrizol proxy statement, it appears that there was a modest change in the "recollection" of events from Lubrizol's perspective, most notably a change in language describing the amount of information relayed to Sokol by Citi's bankers expressing just how seriously LZ was taking Berkshire's preliminary interest in the firm ahead of Sokol's major $10 MM stock purchase.

As a reminder, the old proxy which came out before the Sokol scandal broke, the public had the following narative:

On December 13, 2010, Mr. Sokol and Citi met to discuss the list of companies. During the course of the meeting, Mr. Sokol said that the only company on Citi’s list that he found interesting was Lubrizol. When Mr. Sokol learned from Citi’s representatives that Citi had an investment banking relationship with Lubrizol and its Chairman, President and Chief Executive Officer, Mr. James L. Hambrick, he asked one of the Citi representatives to inform Mr. Hambrick that he was interested in speaking with him and discussing Berkshire Hathaway and Lubrizol, if Mr. Hambrick were available. Mr. Sokol also advised Citi that Berkshire Hathaway does not engage in hostile transactions, and that Mr. Hambrick should understand that if they met and nothing came of the meeting, their meeting would remain confidential. Thereafter, Citi made Lubrizol aware of these discussions, as more fully described below.

On December 14, 2010, the Board convened a regularly scheduled meeting and discussed a number of matters, including the status of Lubrizol’s investigation and evaluation of a number of opportunities for Lubrizol to make acquisitions.

On December 17, 2010, Citi called Mr. Hambrick and relayed the substance of the conversation between Citi and Mr. Sokol on December 13, 2010. Mr. Hambrick indicated that he would inform the Board of Berkshire Hathaway’s possible interest.

The next event in this sequence is Sokol's purchase of 96k shares of LZ on January 5, 6, and 7. So it curious that the just released proxy discloses that little bit more information about the last event before the stock purchase that most likely cost Sokol the most sought after job in all of crony capitalism:

On December 17, 2010, Citi called Mr. Hambrick and relayed the substance of the conversation between Citi and Mr. Sokol on December 13, 2010. Mr. Hambrick indicated that he would inform the Board of Berkshire Hathaway’s possible interest and discussed that Citi would so inform Mr. Sokol. Later on December 17, 2010, Citi informed Mr. Sokol that Mr. Hambrick had indicated that he would discuss Berkshire Hathaway’s possible interest with the Board.

As a reminder from Buffett's belabored and meandering letter:

Shortly before I left for Asia on March 19, I learned that Dave first purchased 2,300 shares of Lubrizol on December 14, which he then sold on December 21. Subsequently, on January 5, 6 and 7, he bought 96,060 shares pursuant to a 100,000-share order he had placed with a $104 per share limit price. 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.

In other words, we now know for a public fact that Sokol was aware that LZ was far further down the path of being acquired in a non-hostile bid by the kindly grandpa, and was most certainly evaluating the opportunity (as opposed to flat out shutting it down). We are left to wonder why the revised proxy made this additional disclosure, or rather, why the original did not. Surely, it was the snow's fault.

We are confident that this incremental data will be sufficient for even the SEC idiots to realize that from point A - the revised proxy filing, to point B - proof of blatant frontrunning, the distance is short enough that even a retarded SEC enforcement lawyer can cross it without getting distracted by porn.

In the meantime, should Sokol become the sacrificial lamb, which it is increasingly apparent will be the case, we now know tongue-in-cheekily that Sokol will drag down that other crony capitalist Charlie "BYD" Munger, down with him.

Frankly, we can't wait, although we know full well that Buffett himself will never be touched: don't forget he granted himself a perpetual get out of jail card. Who can forget the following disclaimer at the end of his self-expurgation "essay" - "Therefore, if questioned about this matter in the future, I will simply refer the questioner back to this release." That particular questioning better be televized...

 

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Tue, 04/12/2011 - 00:07 | 1160501 Bansters-in-my-...
Bansters-in-my- feces's picture

The SEC will do nothing other than ask if there is any new porn movies to watch.

Ritch people and Banksters have different laws than us peasants.

Tue, 04/12/2011 - 00:16 | 1160515 Doña K
Doña K's picture

The ship is going down and everyone tries to get a last 10 banger hit.

Tue, 04/12/2011 - 06:48 | 1160871 MarketTruth
MarketTruth's picture

Forget the 10 bagger at this point and do as the Rothschilds (yes, the world's richest family) have done. Go long physical gold. Sure, if you want to play a bit in the paper fraud market for giggles and few shekels that is fine, yet it is time to migrate to safety with physical gold (and silver).

Tue, 04/12/2011 - 00:11 | 1160505 Oracle of Kypseli
Oracle of Kypseli's picture

The core is rotting. We are doomed.

Tue, 04/12/2011 - 00:20 | 1160517 Doña K
Doña K's picture

Is that what you call mental fatigue in metallurgy?

Tue, 04/12/2011 - 00:17 | 1160516 chump666
chump666's picture

on wires now

* Japan also upped its nuclear crisis level to 7, on a par now with Chernobyl. There are whisperings that a level 8 could be created.
Tue, 04/12/2011 - 00:18 | 1160520 Tyler Durden
Tue, 04/12/2011 - 00:25 | 1160532 Ted K
Ted K's picture

The golf gallery applauds overly politely.  Cancels shark fin soup dinner.

Tue, 04/12/2011 - 00:35 | 1160553 chump666
chump666's picture

...yeah but level 8?

Tue, 04/12/2011 - 00:47 | 1160583 knukles
knukles's picture

How come I was never in the same room as Tyler when she was there?

Tue, 04/12/2011 - 00:52 | 1160594 Id fight Gandhi
Id fight Gandhi's picture

Sure, but here come the so called experts to say that it's not a 10. So it's better than expected. Buy stocks.

Tyler you should list as many shills out there who said buy the the dip in Japan.

Tue, 04/12/2011 - 01:34 | 1160669 chump666
chump666's picture

JP morgan said it yesterday...buy the dip.

then this, everything sells.  That buy the dip crap is gone. Oil at 110 Japan will never recover, unless the govt buys eveything and the IMF (US) bail them out redux

 

 

Tue, 04/12/2011 - 00:31 | 1160544 Seasmoke
Seasmoke's picture

the Good Old Boys at Berkshire may have lived a little bit too long , that they are going to ruin their legacy for history

Tue, 04/12/2011 - 00:31 | 1160547 bob_dabolina
bob_dabolina's picture

This is so interesting to me.

This is the guy Buffet was going to tap to take over Berkshire.

All these years I have said Buffet was piece of shit was 100% accurate.

I will hand it to big WB in that he was able to break the law and NEVER have been caught. Seriously, that is genious to have never been caught. Hat tip to W/B

Pure genius with a big fat cheeseburger to top it off and a cold glass of all American coca-cola.

Tue, 04/12/2011 - 01:20 | 1160657 Id fight Gandhi
Id fight Gandhi's picture

I don't think he will get away with it. This will likely set off closer inspection of their deals. Nobody wants another madoff and that's likely where it's going.

Tue, 04/12/2011 - 00:35 | 1160558 Oh regional Indian
Oh regional Indian's picture

I think crony-psycho-capitalists exhibit nice cannibalistic tendencies.

If only Burn-he Made-off could sing like the full throated canary he is.

ORI

http://aadivaahan.wordpress.com/2011/04/11/wisdom-for-warriors-8/

Tue, 04/12/2011 - 00:46 | 1160584 knukles
knukles's picture

Derivatives are weapons of financial mass destruction.

Tue, 04/12/2011 - 06:27 | 1160862 Urban Redneck
Urban Redneck's picture

As are ratings agencies- M.A.D. can be a bitch.  

Tue, 04/12/2011 - 00:55 | 1160597 Dan The Man
Dan The Man's picture

 

also,  lots of paranoia.

Tue, 04/12/2011 - 01:03 | 1160614 Blorf
Blorf's picture

TBTF banks upgraded to stage 5 cancer on the economy.

Tue, 04/12/2011 - 01:07 | 1160620 worms eye view
worms eye view's picture

Corruption has gone mainstream.  There is no place for honesty and truth anywhere in the republic.  The judicial system is blind.  The sheeple just think that business as usual is the truth.  Opting out....

Tue, 04/12/2011 - 07:09 | 1160880 Ricky Bobby
Ricky Bobby's picture

Res publica mortuus est, vivat imperium

Tue, 04/12/2011 - 01:56 | 1160691 Johnk
Johnk's picture

On the list of things that bother me, billionaire Sokol making $3 million for recommending a stock he liked to Warren is very low on the list.  It's like an average American owning 100 shares of Exxon and telling his wealthy uncle that he thinks it's a good stock. BFD. 

I know there are a lot of Buffett haters on this series of tubes,  and Buffett's coziness with the whole New World Order the past couple years has pissed me off, and Munger went off the rails not long ago with his idiotic comments, but I'll chalk that up to old age. 

Seriously though, this Sokol business is really so awful and earth-shattering that it's making everybody all agitated?  There are far bigger fish to fry.

 

Tue, 04/12/2011 - 08:23 | 1161063 Rick64
Rick64's picture

It's like an average American owning 100 shares of Exxon and telling his wealthy uncle that he thinks it's a good stock.

 No its like insider trading. He was privy to info that would benefit him personally before the buying, and it involved the company he represented.

Tue, 04/12/2011 - 09:11 | 1161203 Jason Bourne
Jason Bourne's picture

No actually Mungers fucking old age did not take him off the rails!! His old fucking age gave him the "I don't give a shit so I'm going to tell you what I really think" freedom.

Fucking self righteous asshole Munger.. May the collapse happen in such a way that the bulk of Americans know who was responsilble

Tue, 04/12/2011 - 10:18 | 1161408 NotApplicable
NotApplicable's picture

Hey, Charlie!

Bellow Your Diaphram!

Tue, 04/12/2011 - 02:10 | 1160704 TruthInSunshine
TruthInSunshine's picture

Buffett is a fat, greasy pig, who projects an image of Wilfred Brimley, but would kill his mother for an extra Cherry Coke when he was a kid.

He's a slime bag extraordinaire.

Tue, 04/12/2011 - 03:32 | 1160755 Seymour Butt
Seymour Butt's picture

And the biggest Welfare Queen.

Tue, 04/12/2011 - 02:18 | 1160709 Johnk
Johnk's picture

No, Buffett is actually not a fat greasy pig who would kill his mother for an extra Cherry Coke.  I think you're exagerrating just a bit.

I admit that if Buffett was all those things, I would be more upset about the Sokol incident.  

Tue, 04/12/2011 - 02:26 | 1160716 Problem Is
Problem Is's picture

"...the distance is short enough that even a retarded SEC enforcement lawyer can cross it without getting distracted by porn."

I don't know... that tranny porn has been awfully mesmerizing for SEC-Retard-Enforcement-Lawyers over the last decade...

Tranny-Porn-Watchin'-SEC-Retard-Enforcement-Lawyers
At least Dodd, Frank and Obummer have job opportunities after politics...

Tue, 04/12/2011 - 03:27 | 1160752 rack
rack's picture

Blue Horseshoe loves Anacott Steel

Tue, 04/12/2011 - 05:15 | 1160803 nkktwotwozero
nkktwotwozero's picture

>...that even a retarded SEC enforcement lawyer can cross it without getting distracted by porn.

Just dont distract them while watching "Ow! My Balls!" and 'batin.

 

Tue, 04/12/2011 - 07:35 | 1160933 HEHEHE
HEHEHE's picture

"Neither Dave nor I feel his Lubrizol purchases were in any way unlawful."

Warren Buffett said the above so any debate is effectively over.  He's like a cross between Jesus, JP Morgan, and Uncle Sam.  Who are we to question him?  Besides it's all too complicated for most of us to follow.  I am turning on Dancing With The Stars.

Tue, 04/12/2011 - 08:20 | 1161058 tmftdoyle
tmftdoyle's picture

For those defending Uncle Warren, perhaps a look at the history of LVLT, in the news today for its offer to purchase Global Crossing, would clear any doubts about your patron saints core principles. As reported, LVLT avoided bankruptcy largerly due to an "investment" by WB during the summer of 2002, also know as the summer of dread for overlevered telecom companies. 

First a little background, WB is bossom buddies with Walter Scott, the chairman-emeritus of Peter Kiewit, chairman of LVLT and a berkshire board member. LVLT is originally a Peter Kiewit company. Mr. Scott's current ownership in LVLT is about 28 million shares. 

The transaction that "saved" (and from WB's perspective the difference in transaction and investment is critical) was a $500mm 9% senior convert sold in the summer 0f 2002. Of course the sycophantic press reported this as an equity investment by WB.  Berkshire bought $100mm of the issue. As would be expected (especially by WB) after the announcement LVLT stock price exploded higher on the deal. WB is instantly in the money  and naturally flips out of his convert shortly after the conversion date for a sweet profit. Nine years later, all the rubes that followed WB in are only 50-75% under water.

 

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