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664
(a)
Buffett
and
Berkshire
Hathaway
(i)
March
2008
In
late
March
2008,
McGee
suggested
that
Lehman
reach
out
to
Buffett.
2429
McGee
had
a
pre
‐
existing
banking
relationship
with
Sokol
of
MidAmerican
Energy,
2430
which
is
majority
‐
owned
by
Buffett’s
Berkshire
Hathaway.
Either
McGee
or
Joseph
G.
Sauvage,
LBI
Vice
‐
Chairman,
called
Sokol
to
ask
if
Buffett
would
take
Fuld’s
call.
2431
Jerry
A.
Grundhofer,
who
was
about
to
join
Lehman’s
Board,
also
asked
Buffett
if
he
would
take
Fuld’s
call.
2432
Buffett
agreed.
2433
Before
calling
Buffett,
Fuld
called
Sokol
on
March
27,
2008.
2434
That
same
day,
Lehman
prepared
a
draft
of
a
letter,
to
be
sent
by
Fuld
to
Lehman
employees,
outlining
a
$3.5
billion
investment
from
Buffett
in
Lehman’s
preferred
stock
at
a
$54
per
share
conversion
price.
2435
Fuld
told
the
Examiner
that
he
did
not
know
how
that
letter
came
to
be
prepared,
and
it
does
not
appear
that
Fuld
saw
the
draft.
2436
Fuld
also
did
not
recall
Buffett
indicating
a
willingness
to
invest
$3.5
billion.
2437
Buffett
was
surprised
that
2429
Examiner’s
Interview
of
Richard
S.
Fuld,
Jr.,
Sept.
30,
2009,
at
p.
8.
2430
At
the
time,
Sokol
was
President
of
MidAmerican.
In
August
2009,
Sokol
became
CEO
of
NetJets,
Inc.,
another
Berkshire
Hathaway
subsidiary.
2431
Examiner’s
Interview
of
David
L.
Sokol,
Sept.
22,
2009,
at
p.
3.
2432
Examiner’s
Interview
of
Jerry
A.
Grundhofer,
Sept.
16,
2009,
at
p.
10.
2433
Examiner’s
Interview
of
Richard
S.
Fuld,
Jr.,
Sept.
30,
2009,
at
p.
8;
Examiner’s
Interview
of
Jerry
A.
Grundhofer,
Sept.
16,
2009,
at
p.
10;
Examiner’s
Interview
of
Warren
E.
Buffett,
Sept.
22,
2009,
at
p.
2.
2434
Richard
S.
Fuld,
Jr.,
Lehman,
Call
Logs
(Mar.
27,
2008)
[LBHI_SEC07940_016916].
2435
E
‐
mail
from
Timothy
Lyons,
Lehman,
to
Scott
J.
Freidheim,
Lehman
(Mar.
27,
2008)
[LBHI_SEC07940_849386].
2436
Examiner’s
Interview
of
Richard
S.
Fuld,
Jr.,
Sept.
30,
2009,
at
pp.
9
‐
10.
2437
Id
.
at
p.
10.
665
Lehman
had
prepared
a
draft
letter
announcing
the
deal,
because
he
never
got
close
to
a
deal
with
Lehman.
2438
Fuld
and
Buffett
spoke
on
Friday,
March
28,
2008.
They
discussed
Buffett
investing
at
least
$2
billion
in
Lehman.
2439
Two
items
immediately
concerned
Buffet
during
his
conversation
with
Fuld.
2440
First,
Buffett
wanted
Lehman
executives
to
buy
under
the
same
terms
as
Buffett.
2441
Fuld
explained
to
the
Examiner
that
he
was
reluctant
to
require
a
significant
buy
‐
in
from
Lehman
executives,
because
they
already
received
much
of
their
compensation
in
stock.
2442
However,
Buffett
took
it
as
a
negative
that
Fuld
suggested
that
Lehman
executives
were
not
willing
to
participate
in
a
significant
way.
2443
Second,
Buffett
did
not
like
that
Fuld
complained
about
short
sellers.
2444
Buffett
thought
that
blaming
short
sellers
was
indicative
of
a
failure
to
admit
one’s
own
problems.
2445
2438
Examiner’s
Interview
of
Warren
E.
Buffett,
Sept.
22,
2009,
at
p.
4.
2439
Examiner’s
Interview
of
Richard
S.
Fuld,
Jr.,
Sept.
30,
2009,
at
p.
10;
Examiner’s
Interview
of
Warren
E.
Buffett,
Sept.
22,
2009,
at
p.
4.
2440
Examiner’s
Interview
of
Warren
E.
Buffett,
Sept.
22,
2009,
at
p.
4.
2441
Examiner’s
Interview
of
Richard
S.
Fuld,
Jr.,
Sept.
30,
2009,
at
pp.
9
‐
10;
Examiner’s
Interview
of
Warren
E.
Buffett,
Sept.
22,
2009,
at
p.
3.
2442
Examiner’s
Interview
of
Richard
S.
Fuld,
Jr.,
Sept.
30,
2009,
at
pp.
9
‐
10.
2443
Examiner’s
Interview
of
Warren
E.
Buffett,
Sept.
22,
2009,
at
p.
3.
2444
Id
.
at
p.
4.
Paulson
told
the
Examiner
that
he
did
not
think
that
Buffett
would
be
interested
in
Lehman.
Paulson
told
the
Examiner
that
he
thought
Fuld’s
suggestion
of
Buffett
as
a
potential
investor
indicated
that
Fuld
was
“scared,
but
not
scared
enough”
and
did
not
appreciate
the
gravity
of
Lehman’s
situation
in
March
2008.
Examiner’s
Interview
of
Henry
M.
Paulson,
Jr.,
June
25,
2009,
at
p.
12.
2445
Examiner’s
Interview
of
Warren
E.
Buffett,
Sept.
22,
2009,
at
p.
3.
666
Following
his
conversation
with
Buffett,
Fuld
asked
Paulson
to
call
Buffett,
which
Paulson
reluctantly
did.
2446
Buffett
told
the
Examiner
that
during
that
call,
Paulson
signaled
that
he
would
like
Buffett
to
invest
in
Lehman,
but
Paulson
“did
not
load
the
dice.”
2447
Buffett
spent
the
rest
of
Friday,
March
28,
2008,
reviewing
Lehman’s
10
‐
K
and
noting
problems
with
some
of
Lehman’s
assets.
2448
Buffett’s
concerns
centered
around
Lehman’s
real
estate
and
high
yield
investments,
lending
‐
related
commitments,
derivatives
and
their
related
credit
‐
market
risk,
Level
III
assets
and
Lehman’s
securitization
activity.
2449
On
Saturday,
March
29,
2008,
Buffett
learned
of
a
$100
million
problem
in
Japan
that
Fuld
had
not
mentioned
during
their
discussions,
and
Buffett
was
concerned
that
Fuld
had
not
been
forthcoming
about
the
issue.
2450
The
problems
Buffett
saw
in
the
10
‐
K
along
with
Fuld’s
failure
to
alert
Buffett
to
the
issue
in
Japan
cemented
Buffett’s
decision
not
to
invest
in
Lehman.
2451
At
some
point
in
their
conversations,
Fuld
and
Buffett
also
discovered
that
there
had
been
a
miscommunication
about
the
conversion
price.
Buffett
was
interested
only
2446
Examiner’s
Interview
of
Henry
M.
Paulson,
Jr.,
June
25,
2009,
at
p.
12;
Examiner’s
Interview
of
Richard
S.
Fuld,
Jr.,
Sept.
30,
2009,
at
p.
8.
2447
Examiner’s
Interview
of
Warren
E.
Buffett,
Sept.
22,
2009,
at
p.
2.
2448
Id
.
at
p.
3.
2449
Id.
Buffett
made
notes
on
many
of
the
10
‐
K
pages
about
Lehman’s
financials.
Those
notes
illustrate
that
Buffett
had
questions
or
took
issue
with
much
of
what
Lehman
was
reporting,
as
he
stated
during
his
interview.
Additionally,
Buffett
seems
to
have
had
a
heightened
focus
on
Lehman’s
real
estate
and
high
yield
assets
and
on
accounting
issues
relating
to
the
stock
price,
assets,
or
liabilities.
Id.
2450
Id.
at
pp.
3
‐
4.
Accord
Examiner’s
Interview
of
Richard
S.
Fuld,
Jr.,
Sept.
30,
2009,
at
p.
10.
2451
Examiner’s
Interview
of
Warren
E.
Buffet,
Sept.
22,
2009,
at
p.
4.
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