Warren Buffett: World's Greatest Investor

From the New York Times Deal Book:

March 31, 2011
The Perception of the Sokol Situation

ANDREW ROSS SORKIN

Perception is more important than reality.

After watching David L. Sokol on Thursday morning on CNBC as he tried to explain some potentially questionable trades he made in Lubrizol before Berkshire Hathaway bought the company, I was struck by what appeared to be a remarkable lack of appreciation for the way the public would perceive his actions.

Mr. Sokol clearly appeared to believe he had not done anything wrong or broken any rules when he bought shares of Lubrizol on Dec. 14, just a day after he instructed Citigroup to set up a meeting on behalf of Berkshire Hathaway to potentially orchestrate an acquisition of the company.

I have met Mr. Sokol before, found him to be an honest man and take his word that he thought he had acted completely appropriately.

But the facts paint an unattractive picture that creates a public perception problem — even if the reality of the situation is more innocent (I don’t know if it is or isn’t)...

Perhaps most striking, Mr. Sokol said on Thursday morning that if he could do it again, he would have bought shares of Lubrizol but not subsequently suggested that Mr. Buffett buy the company.

Putting aside the legality of the trade — and several lawyers I have spoken with believe the S.E.C. will scrutinize this matter seriously — the transactions demonstrate poor judgment.

Mr. Buffett once said: “Contemplating any business act, an employee should ask himself whether he would be willing to see it immediately described by an informed and critical reporter on the front page of his local paper, there to be read by his spouse, children and friends.”

That is a good rule to live by.

 http://dealbook.nytimes.com/2011/03/31/the-perception-of-the-sokol-situation/?src=mv