NEW YORK — David Sokol, the Berkshire Hathaway Inc. executive who resigned last month, violated company policies and misled senior management about his personal investments, according to a report by the audit committee of Berkshire’s board of directors.

Sokol, who bought shares of a chemicals company shortly before recommending that Berkshire acquire the company outright, may face legal action from the Berkshire board to recover gains from the trades, according to the report, which was released Wednesday by Berkshire.

Sokol insisted in conversations with Berkshire Chairman Warren Buffett and in public statements that his departure was unrelated to the stock purchases. On Wednesday night, Sokol’s lawyer, in a statement, took issue with the report’s conclusions and said the audit committee hadn’t contacted him.

The audit committee report examines in detail a conversation Sokol had with Buffett about the chemicals company, Lubrizol Corp. , in January. In response to a question from Buffett, the report says, Sokol said he knew about the company because he owned its shares. In fact, Sokol had discussed Lubrizol with bankers, asked the bankers to contact Lubrizol’s chief executive to begin the process of exploring an acquisition, and then purchased the stock, according to the report and accounts of the transaction released earlier by Berkshire and Lubrizol.

Buffett didn’t ask for details about the date and amount of Sokol’s purchases at that time, and only asked Berkshire Chief Financial Officer Marc Hamburg to investigate after a banker said his firm had brought Lubrizol to Sokol’s attention.

“This was the first time Mr. Buffett heard that investment bankers played any role in introducing Lubrizol to Mr. Sokol, and did not square with Mr. Sokol’s remark in January that he had come to know Lubrizol by owning the stock,” the committee report says.

Sokol’s remarks “did not satisfy the duty of full disclosure inherent in the Berkshire Hathaway policies,” the report concluded.

Berkshire’s $9 billion deal to acquire Lubrizol in March boosted the value of Sokol’s stake in the company by $3 million.

Sokol’s lawyer, Barry Wm. Levine, said Sokol “would not, and did not, trade improperly, nor did he violate any fair reading of the Berkshire Hathaway policies.” Sokol had been studying Lubrizol for a possible investment since June, he said, and criticized Berkshire for releasing the report “without the care and decency to ask even a single question of Mr. Sokol.”

Levine also said Sokol had spoken with Buffett about his ownership of Lubrizol stock twice, not once as claimed in the report.

In his statement announcing Sokol’s departure in late March, Buffett complimented Sokol’s work running three Berkshire subsidiaries and said he didn’t feel the Lubrizol purchases were “in any way unlawful.”

But a barrage of criticism ensued–both of Sokol, for making the purchases, and of Buffett, for not raising a red flag about them sooner and for heaping praise on Sokol upon his exit despite Buffett’s long-time insistence on the highest ethical standards in business practices.

The report argues that Buffett didn’t find out more about Sokol’s ownership of Lubrizol shares because “it did not cross Mr. Buffett’s mind at that time that Mr. Sokol might have bought Lubrizol shares after seeking through investment bankers to initiate discussions with Lubrizol concerning a possible Berkshire Hathaway acquisition of Lubrizol.”

Sokol’s “remark to Mr. Buffett in January, revealing only that he owned some Lubrizol stock, did not tell Mr. Buffett what he needed to know….[I]ts effect was to mislead: it implied that Mr. Sokol owned the stock before he began considering Lubrizol as an acquisition candidate, when the truth was the reverse.”

“The report lets Buffett off the hook regarding Sokol’s deceptive response, perhaps to a greater degree than is justified,” said Ronald L. Rubin, a securities lawyer at Tannenbaum Helpern Syracuse & Hirschtritt LLP in New York. “One could argue that if Buffett were listening to Sokol carefully, he would have followed up by asking `Yes, but you didn’t answer my question. How did you hear about Lubrizol in the first place?’”

Berkshire policies regarding insider trading state that executives must refrain from trading in companies that “may be involved in a significant transaction with Berkshire.” The report concluded that several factors may “have kept Mr. Sokol’s actions below the level of probability required to support a finding of materiality for purposes of finding a violation of federal insider trading law. But the Trading Policy requires a higher standard of conduct than what is required to avoid being charged with a federal securities violation.”

The report also concludes that laws in Delaware, the state when Berkshire is incorporated, reinforced the “duty” Sokol had to make a full disclosure to Berkshire.

The committee said the board would consider “possible legal action against Mr. Sokol to recover any damage the Company has sustained, or his trading profits, or both,” and would examine “possible enhancements to its procedures.”

The release of the report comes just three days before Buffett plays host to roughly 37,000 people at Berkshire’s annual shareholders meeting in Omaha. Much of the day is set aside for shareholders to ask unscreened question of Buffett, who had initially said he planned to make no further statements about Sokol’s resignation. Hamburg later said Buffett did plan to address the matter at the meeting.

Sokol had long been considered by outsiders to be a leading candidate to replace Buffett as Berkshire’s next chief executive. The report includes an aside related to the succession issue, saying that Buffett offered Sokol an opportunity to examine the March statement announcing Sokol’s departure before publishing it.

“At Mr. Sokol’s request, Mr. Buffett deleted from the release the one passage Mr. Sokol said was inaccurate: a passage that implied that Mr. Sokol had resigned because he must have known the Lubrizol trades would likely hurt his chances of being Mr. Buffett’s successor,” according to the report. “Mr. Sokol told Mr. Buffett that he had not hoped to be Mr. Buffett’s successor, and was resigning for reasons unrelated to those trades.”

–Shira Ovide contributed to this article

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