David Sokol, then– second in command at Warren Buffett's Berkshire Hathaway company, bought $ 10 million in shares of Lubrizol, a company whose acquisition he would later recommend to Mr. Buffett. He then shepherded through the acquisition.
When the SEC investigation of Mr. Sokol's advance stock purchase became public, Mr. Buffett said, “ Neither Dave nor I feel his Lubrizol purchases were unlawful.” The audit committee for Berkshire Hathaway investigated and issued a report that condemned Mr. Sokol's conduct. Shortly thereafter, Mr. Buffett spoke at the annual shareholder meeting, “ I don't think there's any question about the inexcusable part. He violated the code of ethics. He violated our insider trading rules. He violated the principles I lay out every two years.” Did Mr. Sokol violate 10( b)?