| WILMINGTON, Del., March 19
WILMINGTON, Del., March 19 Berkshire Hathaway
won dismissal on Monday of a shareholder lawsuit that
stemmed from allegations former executive David Sokol profited
by violating the company's insider trading policy.
Shareholders sued the conglomerate's board for refusing to
take legal action against Sokol, a former heir apparent at
Sokol resigned last year after disclosing he bought 96,000
shares of Lubrizol Corp and then urged Berkshire Chief Executive
Warren Buffett to acquire the chemical company.
The episode has raised questions about Buffett's oversight
of the conglomerate, which he has led since 1965.
Buffett said last year that Sokol violated the company's
insider trading rules to score a $3 million windfall profit on
Lubrizol shares, which rose by nearly a third after Berkshire
announced it would buy the company.
Although Delaware Chancery Court judge Travis Laster
dismissed the case, he described the claims against Sokol as
"really strong" and said it might raise questions if the board
did not pursue Sokol.
"If they are not doing something with a claim like that, you
have to wonder why," he said.
Laster also said the initial news release from the company
disclosing Sokol's trade in Lubrizol suggested "a willingness to
let him slide."
However, Laster said the shareholders failed to make their
argument the board was so beholden to their prestigious
positions that they could not be trusted to pursue Sokol, a
once-close associate of Buffett.
The shareholders wanted the right to pursue that litigation
on behalf of the company in what is known as a derivative
Laster accepted Berkshire Hathaway arguments that the
company could reasonably want to wait for the outcome of an
investigation by the Securities and Exchange Commission and may
still sue Sokol.
The company's attorney said he did not know the status of
the SEC investigation.
Shareholders Mason Kirby and Alejandro Gonzalez were also
seeking to force Buffett and other directors to compensate the
company for damage to its reputation.
Laster called that claim "profoundly weak."
The lawsuit was dismissed without prejudice, meaning
shareholders could still file an amended lawsuit. An attorney
for the shareholders declined to comment on plans to do so.