David Sokol. (Photo: AP)

The Securities and Exchange Commission has finished its investigation of Warren Buffett’s possible successor, David Sokol, regarding possible insider trading.

The Wall Street Journal reported Jan. 3 that the SEC has decided “not to take action,” according to Sokol’s attorney.

SEC spokesman John Nester declined to provide a comment on the matter to AdvisorOne, stating that any letter to terminate an investigation is not a public document.

The Journal reported that Barry Wm. Levine, Sokol’s lawyer, said he was informed on Jan. 3 that the SEC had wrapped up its investigation and decided not to take action.

“There has been a thorough legal analysis and factual scrutiny and the SEC has concluded, as we have always maintained, that David Sokol never did anything wrong,” Levine told The Journal.

While Buffett has named his son Howard as his possible successor as chairman of Berkshire Hathaway, Sokol, Buffett’s former No. 2 at the company, was also considered a possible successor until it was discovered that he had bought millions of dollars in stock in Lubrizol Corp. before suggesting Buffett, the Berkshire CEO, buy the chemical company.

Sokol abruptly resigned in March 2011 after that news came to light.

As The Journal reports, at issue in the SEC investigation was Sokol’s purchase of about $10 million worth of shares of Lubrizol, a stake that rose in value by about $3 million when Berkshire bought the company.

According to The Journal, Sokol first bought shares of Lubrizol in December 2010 and January 2011 after discussing the company with investment bankers. He subsequently recommended that Buffett buy the chemicals firm. Two months later, in March, Berkshire said it would acquire Lubrizol for $9 billion.

A 2011 report by the audit committee of Berkshire’s board concluded Sokol had misled Buffett about how he first heard about Lubrizol, The Journal says.

The SEC began investigating the investment shortly after Sokol resigned from Berkshire. Says The Journal report: “Buffett said at the time that Berkshire had turned over ‘very damning evidence’ about the purchases to the SEC.”