David Sokol the former Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) trader accused of insider trading by the Securities and Exchange Commission, is now completely free and clear of those charges. The SEC has dropped its case against Sokol, according to The Wall Street Journal.
Sokol resigned suddenly from Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B)’s MidAmerican Energy Holdings. Warren Buffett, the well-known billionaire manager of Berkshire Hathaway, said at that time that Sokol purchased shares of Lubrizol about two months before Berkshire announced that it would acquire the company. The announcement of course sent shares of Lubrizol soaring.
Sokol was once considered to be a possible replacement for Buffett one day, so his resignation came as a surprise to Berkshire. Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B)’s audit committee accused him of misleading the company about his personal investment into Lubrizol. Sokol had been considering making a personal investment in Lubrizol for at least a year before the trades in question happened.
Buffett himself said he did not believe Sokol did anything wrong at first, but later after the audit committee brought the trades to his attention, he said they violated company policy. Buffett cooperated with the SEC’s investigation.
Sokol’s lawyer said he didn’t do anything wrong, and the SEC has declined to comment on the case, which is not unusual when it decides not to pursue a case. Lawyers for the SEC said there was not enough evidence against Sokol to mount a successful case against him. They said it was all circumstantial evidence.