Pyramid of Profiteers
Yarett, Ian, Coppins, Mckay, Newsweek
Byline: Mckay Coppins And Ian Yarett
What was David Sokol thinking? The Berkshire Hathaway golden boy shocked the business world last month after he came under scrutiny for possible insider trading. He's hardly alone. Lining your pockets by exploiting Wall Street's gray areas is a time-honored tradition. Our guide to how Sokol stacks up.
Company: Countrywide Financial
Transgression: Pocketed millions while company doled out subprime mortgages, hid rising risks from investors.
Impact: Crippled the economy by contributing to the subprime-mortgage crisis.
Punishment: Fined $67.5 million by the SEC.
Company: Lehman Bros.
Transgression: Stubbornly passed up deals that could have saved his bank.
Impact: Investors paid the price when the company went bankrupt.
Punishment: Subpoenaed by U.S. attorney but hasn't been charged with a crime.
Transgression: Boosted Sunbeam's earnings to record levels through dubious accounting.
Impact: Investors felt duped, and Sunbeam ultimately filed for bankruptcy.
Punishment: Paid $15.5 million to settle shareholder and SEC lawsuits.
Company: Berkshire Hathaway
Transgression: Invested in Lubrizol just before Berkshire acquired it, earning him a substantial premium on his shares.
Impact: Warren Buffett's reputation took a knock.
Punishment: Sokol resigned and the SEC is reportedly weighing a probe.
Company: Fannie Mae
Transgression: Allegedly oversaw deceptive accounting practices, granting top bosses oversize bonuses.
Impact: Dragged Fannie Mae through the mud, costing it a $400 million civil fine.
Punishment: Paid relatively small fine, forfeited $5.3 million in benefits.
Transgression: AIG sold billions of dollars' worth of credit insurance to investment banks but couldn't produce the cash once the financial crisis hit. …