Published: Thursday, 28 Apr 2011 | 11:12 AM ET
By: Alex Crippen
Executive Producer
It was just under a month ago
Warren Buffett was writing that David Sokol's resignation was a "total surprise" to him and "Neither Dave nor I feel his Lubrizol purchases were in any way unlawful."
Buffett praised Sokol's "extraordinary" contributions to Berkshire, including his "resurrection" of NetJets.
Now, of course, the relationship isn't as cordial.
After last night's report from Berkshire's Audit Committee accused Sokol of misleading Buffett on Lubrizol and possibly breaking the law, lawyers for both sides fired public statements at each other.
First, Sokol's side, from Dickstein Shapiro partner Barry Wm. Levine:
I am profoundly disappointed that the Audit Committee of Berkshire Hathaway would authorize the issuance of its report to the public without the care and decency to ask even a single question of Mr. Sokol. Mr. Sokol had been associated with the Berkshire Hathaway companies for 11 years. During this time, his indefatigable efforts helped create enormous value for the Berkshire shareholders. He deserved better...
I have known Mr. Sokol and have represented his companies in business litigation since the mid 1980s. I know him to be a man of uncommon rectitude and probity. He would not, and did not, trade improperly, nor did he violate any fair reading of the Berkshire Hathaway policies.
Then, Ron Olson, a partner at Munger Tolles and Olson, fired back:
Mr. Sokol was interviewed at least three times regarding his Lubrizol trading activity and contacts with Citi bankers. In connection with the preparation of the audit committee report, a request for a further interview with Mr. Sokol was made to his attorney. Mr. Sokol was not made available.
Watch for more shots at Sokol this weekend at the Berkshire shareholders meeting. And remember that Berkshire is threatening to sue Sokol to get his Lubrizol stock profits.
Current Berkshire stock prices:
Class B: [BRK.B 83.27 
0.28 (+0.34%) 
]
Class A: [BRK.A 124805.00 356.00 (+0.29%) ]
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David Sokol appearing live on CNBC's Squawk Box on March 31, 2011, the morning after his surprise resignation was announced.
Warren Buffett tells CNBC he wants to make his first public comments to shareholders this weekend about tonight's blistering report by Berkshire Hathaway's Audit Committee on David Sokol's Lubrizol trades.
Buffett promises to "welcome all questions" on the Sokol scandal this coming Saturday, when tens of thousands of Berkshire shareholders will be in Omaha for the company's annual meeting.
He'll also answer Becky Quick's questions about the matter when he does his first live interview following the meeting, appearing on CNBC's Squawk Box between 8 AM and 9 AM ET Monday morning.
There's no statement from Buffett in the news release accompanying tonight's release of an 18-page report finding that Sokol violated the company's ethical standards when he bought Lubrizol shares while "serving as a representative of Berkshire Hathaway in connection with a possible business combination with Lubrizol."
Buffett hasn't said anything about the matter since his unusual public letter less than a month ago first revealing Sokol's Lubrizol purchases. At that time, Buffett wrote he would not have anything to say on the matter in the future.
Tonight's report appears to be a response to widespread criticism about Buffett's handling of Sokol's trades and resignation.
Berkshire's Audit Committee also accuses Sokol of making "misleadingly incomplete disclosures" to Berkshire's senior management about his Lubrizol stock buys, even as he was recommending that Berkshire buy the company.
The panel says Berkshire is considering "possible legal action against Mr. Sokol to recover any damage the Company has sustained, or his trading profits."
Sokol made a profit of around $3 million on his shares when Berkshire announced on March 14 that it would buy the chemicals company at a 28 percent premium to where Lubrizol was trading.
Sokol appeared live on CNBC (complete transcript) on March 31, the morning after his surprise resignation as a top Berkshire executive was announced. At that time he strongly defended his actions, insisting he did nothing wrong.
When asked if he would have done anything differently, he told Becky he would "never have mentioned it to Warren, and just made my own investment and left it alone."
So far tonight, we have not been able to reach him for his response to the Audit Committee's accusations.
Before the scandal, Sokol had been considered the leading candidate to eventually succeed Buffett as Berkshire's CEO.
2011 Berkshire Hathaway
Annual Shareholders Meeting
Saturday, April 30th
The 2011 Annual Meeting will be held at:
Qwest Center Omaha
455 North 10th Street
Downtown Omaha
www.qwestcenter.com
How To Get Your AnnualMeeting Credentials
You must be a Berkshire Hathaway Shareholder
Shareholders are entitled to a maximum of 4 meeting credentials
The 2010 Annual Reports will be mailed to shareholders of record and
beneficial-but-not-of-record shareholders beginning in mid-March. Included
in the mailing will be the Proxy Statement. A perforated postcard will be
attached to the Proxy. Fill out and return the postcard to order your meeting
credentials
The 2011 Visitor’s Guide will be posted at this site mid-March with a more detailed
listing of weekend events, shuttle service, hotels and points of interest listings.
The meeting credentials are required for entry
to not only the annual meeting and other related events,but also to receive shareholder discount pricing.
Berkshire Shareholder Discount Periods
Borsheims
Monday, April 25th – Saturday, May 7th
Nebraska FurnitureMart
Tuesday, April 26th – Monday, May 2nd
Weekend Activities
Weekend activities will begin on Friday evening and conclude with dinner on
Sunday evening.
Friday, April 29
Borsheims
Shareholder Reception
6:00 – 9:00pm
Saturday, April 30
AnnualMeeting
Doors Open 7:00am
Company Movie 8:30am
Q&A 9:30am – 3:30pm
Business Meeting 3:45 – 4pm (approximation)
NetJets Display Noon – 5pm
Lunch Break Noon – 12:45
Exhibit Booths Close 4:30pm
NFM Picnic 5:30 – 8:00pm
Sunday, May 1
Borsheims
Exclusive Shareholder Shopping Day
9:00am – 4:00pm
Shareholder Steak Night!
Gorat’s Steakhouse
1:00pm – 10:00pm Sunday
Reservations required (but not accepted before April 1)
402/551-3733
Piccolo’s
Open at 4:00pm Sunday
Friday 5-10pm
Saturday 4:30-10pm
402/342-9038
Currently taking reservations!
TRAVEL & HOTEL ASSISTANCE
Contact American Express Travel for hotel and airline reservations
They will be able to give you up-to-the-minute information on hotel availability
1-800/799-6634
402/697-5314 (Outside the U.S.)
berkshire@aexp.coms
* Q1 EPS 67 cents vs Street view 66 cents
* Revenue falls 5.2 pct to $20.33 bln
* Shares down 4.9 percent (Rewrites to focus on falling revenue, adds investor comment, background on Wells Fargo)
By Philipp Gollner and Clare Baldwin
SAN FRANCISCO/NEW YORK, April 20 (Reuters) - Wells Fargo & Co (
WFC.N), the fourth-largest U.S. bank, posted a decline in revenue, and shares fell 4.9 percent as a bank known for outsmarting rivals turned in an average performance.
Net earnings rose 50.5 percent, but gains were driven mainly by setting aside less money to cover bad loans. The bank's loan book shrank as outstanding loans to consumers declined and loans to companies did not grow enough to compensate.
Credit quality improved for the bank, as it did for rivals, but investors are less clear about where future profit growth will come from.
"It's a simple issue of their revenue being weak and their earnings before taxes and provisions being down significantly. I think that's why the stock is down," said Keith Davis, an analyst at Farr, Miller & Washington, with $730 million under management.
Wells Fargo was one of the biggest mortgage lenders in the United States in the years leading up to the housing crisis, but managed to stay profitable during all but two quarters during the financial crunch.
Warren Buffett's Berkshire Hathaway (BRKa.N) (BRKb.N) has long invested in the bank because of the strength of its retail franchise and its skill at selling multiple products to customers.
But some investors now wonder if Wells Fargo's edge is disappearing.
"They're becoming more like every other bank," one hedge fund manager said on Wednesday.
Wells Fargo shares fell $1.46 to $28.61 in early afternoon trading.
The bank's first-quarter net income for common stockholders rose to $3.57 billion, or 67 cents per share, from $2.37 billion, or 45 cents per share, a year earlier. Revenue fell 5 percent to $20.33 billion.
Wells Fargo cut the amount of money it set aside for bad loans to $2.21 billion from $5.33 billion a year earlier. It also released $1 billion, pre-tax, from its reserves.
