BOSTON ( TheStreet) -- So let me get this straight: There is a job vacancy at a prestigious investment company where I can get access to a list of potential acquisitions prepared by investment bankers, I can trade on these ideas in my personal account, and I can profit on these investments by influencing what my boss ends up buying? Where do I sign up?
It's almost as if David Sokol is daring the Securities and Exchange Commission to take a harder look at Warren Buffett and Berkshire Hathaway (BRK-B), essentially offering up the bulletproof billionaire investor on a silver platter to regulators.
And they'd be stupid not to.
In a statement late Wednesday, Buffett announced Sokol's surprise resignation, disclosing that Sokol had purchased roughly $10 million in shares of Lubrizol (LZ) before Berkshire acquired the chemicals company for $9 billion. Sokol, who had been chairman of several Berkshire subsidiaries, earned a nearly $3 million profit on the trades.Buffett defended Sokol's purchases of Lubrizol, saying they were made before any discussions of a Lubrizol buyout were discussed. Buffett also pointed out that Sokol would have no voice in Berkshire's decision in buying the company. He even made it a point to say that Sokol's actions were not unlawful. It doesn't appear that Sokol has the same loyalty for his former boss. Sokol became interested in Lubrizol after Citigroup (C - Get Report) bankers approached him with a list of possible transactions last year, according to a regulatory filing. Sokol made personal purchases of Lubrizol before suggesting the company to Buffett. Sokol's trades were an introductory course on how to front-run your company's portfolio. Common sense should have told Sokol to sell his stake in Lubrizol before passing the idea along to Buffett. Any other investor at a firm would have been found out and fired on the spot for front-running a portfolio. Shockingly, Sokol doesn't seem to think what he did was improper. During a televised interview on CNBC Thursday morning, Sokol insisted he never had inside information on the Lubrizol deal and that he never expected Buffett to move as fast as he did on the deal. Given the opportunity again, Sokol claims he'd still invest in Lubrizol but he wouldn't have passed the idea along to Buffett. That's akin to admitting guilt.
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