Two takeaways: one, someone eventually would break the rule no matter how strict it is; two, when you openly made bad moves, admitting it is the smartest like Buffett did.
In March, David Sokol, who was widely considered a leading contender to replace Warren Buffett at the helm of Berkshire Hathaway, resigned after admitting that he had bought shares of chemical company Lubrizol just two months before the company agreed to be acquired by Berkshire. Berkshire’s audit committee released a report concluding that Sokol had broken company rules and misled Berkshire officials about his stake in Lubrizol, which he denied. The incident was a black eye for good guy Buffett, who was criticized for backing Sokol at the time of his resignation. Since then, Berkshire has said it might sue Sokol over the violations. Buffett admitted he could have handled the situation better.