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Sokol affair "credit negative" for Berkshire: Moody's
David Sokol, Chairman, MidAmerican Energy Holdings, and Chairman, President, and CEO of NetJets, listens to a question during the Fortune Brainstorm Green conference in Dana Point, California in this April 13, 2010 file photograph.
Credit: Reuters/Mario Anzuoni/Files
NEW YORK |
NEW YORK (Reuters) - The resignation of a key lieutenant this week could damage the credit quality of Warren Buffett's Berkshire Hathaway (BRKa.N) (BRKb.N), Moody's Investors Service said on Friday.
Berkshire executive David Sokol resigned this week, and said he bought shares in a company he later pitched to his boss. While Buffett said Sokol did nothing unlawful, the episode has raised concerns about Berkshire's reputation.
These events are a "credit negative for Berkshire," Moody's said in a note published on Friday.
Sokol's resignation portrays "a senior officer with the appearance of a conflict of interest, may give rise to burdensome regulatory/legal investigations, and raise questions regarding Berkshire's risk controls," according to the note.
The events also "underscore governance challenges at Berkshire that could impact credit quality," Moody's said.
The rating agency said the events surrounding Sokol's departure had not changed Berkshire's Aa2 senior debt rating and stable outlook.
(Reporting by Maria Aspan; editing by Carol Bishopric)
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