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...