It's funny how ordinary people are prosecuted for trading on inside information and other similar offenses, but when it comes to top dogs at firms like Berkshire.... not so much.
When bankers from Citigroup Inc. met David Sokol late last year to talk about potential transactions, they thought they were dealing with him as a senior executive of Berkshire Hathaway Inc., according to people familiar with the matter.
It nonetheless came as a "shock" to the Citigroup bankers when they learned Mr. Sokol bought roughly $240,000 of shares of Lubrizol Corp. a day after their meeting, sold them, and then purchased $10 million shares about two months before Berkshire's $9 billion deal unveiled March 14 to acquire Lubrizol, according to people familiar with the matter.
Why would that be shocking?
Let's remember the early parts of the 08/09 crisis. Berkshire's Buffett was consulted on TARP:
Buffett, by telephone, was consulted by lawmakers who were in marathon talks on Capitol Hill to forge a deal on the administration's $700 billion economic bailout plan, according to two sources.
One lawmaker in the negotiations said that the participants called Warren Buffett to get his help in gauging potential market reaction.
Congressional leaders said shortly after midnight Saturday that they had reached a tentative deal. Members of both parties and Treasury Secretary Henry Paulson were aiming to craft final legislation by Sunday evening -- in time for the start of financial markets around the world. (Reported September 28th)
Remember Buffett's Goldman "investment"?
On Tuesday Buffett's company Berkshire Hathaway (BRK.A) invested $5 billion in Goldman Sachs (GS, Fortune 500). The cash gives one of the last-remaining Wall Street investment banks a much-need boost as credit has tightened. Buffett's move also helped shore up confidence in financial stocks. (September 24th)
Hmmm... remember the terms of that deal? Buffett bought warrants and preferred. The latter paid a fat 10% dividend - effectively a loan. The former were "free" with the latter, but provided a conversion right at $115. Goldman had the right to call the preferred at a 10% premium, but the warrants? Uh, no.