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March 30, 2011

Buffett aide who bailed out Constellation resigns

David Sokol, the chief of MidAmerican Energy who saved Constellation Energy from bankruptcy in the thick of the 2008 financial crisis, has abruptly resigned from Berkshire Hathaway, MidAmerican's owner. Sokol was the guy who negotiated with Constellation boss Mayo Shattuck and extracted a huge ransom from Constellation shareholders for the rescue.

Andrew Ross Sorkin reports some stock transactions by Sokol that might be perceived as front-running Berkshire shareholders. Berkshire recently announced it would buy Lubrizol, and Sokol had been buying Lubrizol stock earlier. Sorkin:

Mr. Sokol purchased 2,300 shares of Lubrizol on Dec. 14, which he then sold on Dec. 21, according to Mr. Buffett. On Jan, 5, 6 and 7, Mr. Sokol bought 96,060 shares “pursuant to a 100,000-share order he had placed with a $104 per share limit price,” Mr. Buffett’s statement said.

Here is an excerpt from a good Fortune profile of Sokol after his staredown with Shattuck:

Sokol phoned the office of Constellation CEO Mayo Shattuck III, who was in an emergency board meeting. When his assistant answered, Sokol told her he'd like to speak to him. The secretary replied that if she interrupted the meeting, she might lose her job. Sokol replied, "If you don't interrupt the meeting, you might lose your job."

Sokol boarded a Falcon 50EX and sped to Baltimore. He met with Shattuck and struck a deal that evening to buy the company for $4.7 billion, staving off bankruptcy.



Posted by Jay Hancock at 9:44 PM | | Comments (2)
Categories: BGE/electricity
        

Comments

Berkshire is in the middle of an Accounting issue as well. To the tune of $1B, I believe?
Sokol turned NetJets into a profitable enterprise for Berkshire. Curious on the timing though.

I am glad only that Sokol was outed as a guy who'd sell Berkshire's reputation for a measly three million, and that, whether he jumped or was gently pushed, he's been ousted. Now, if only the fan boys would stop defending Buffett against Buffett...

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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