SEC ends probe of former Buffett aide

No insider-trading charges to be filed for Berkshire Hathaway’s Sokol

— The Securities and Exchange Commission has decided not to file insider-trading charges against David Sokol, a onetime top lieutenant at Berkshire Hathaway, Sokol’s lawyer said Thursday.

Sokol came under scrutiny in 2011 after abruptly resigning as chairman of Berkshire’s MidAmerican Energy Holdings, one of the many holdings of the investment conglomerate run by billionaire Warren Buffett.

At the time, Berkshire revealed that Sokol bought shares in Lubrizol, a maker of lubricants that he wanted Buffett to buy. Sokol bought the shares about two months before Berkshire announced a $9 billion acquisition of the company. After the deal was announced, the value of his Lubrizol stake rose by $3 million.

But Sokol’s attorney, Barry Levine, said the SEC informed his client Thursday that it had decided not to pursue a civil enforcement act.

Levine said that he was happy that his client had been “exonerated,” and said that Sokol had never acted improperly in the trades.

“He is the paragon of rectitude,” said Levine, a partner at the law firm Dickstein Shapiro in Washington.

SEC spokesman John Nester declined to comment Thursday.

The agency typically does not comment when it decides not to pursue action in such cases. The news was first reported online by The Wall Street Journal.

A star manager, Sokol had run several Berkshire subsidiaries, including MidAmerican Energy and NetJets, which sells fractional ownerships of private jets.

He was long considered to be a leading candidate to succeed Buffett, 82.

His sudden resignation caught Berkshire by surprise. Buffett said he did not ask for Sokol’s resignation, suggesting at the time that it was a personal decision by Sokol.

Buffett initially defended his protege’s trading.

“Neither Dave nor I feel his Lubrizol purchases were in any way unlawful,” Buffett said at the time. “He has told me that they were not a factor in his decision to resign.”

But additional information surfaced after the Berkshire board investigated Sokol’s trading record.

Berkshire directors ultimately accused Sokol of misleading the company about his personal stake in Lubrizol.

Sokol bought $10 million worth of stock in Lubrizol shortly before bringing the company to Buffett’s attention, according to the board.

Business, Pages 26 on 01/05/2013

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