Berkshire Hathaway won dismissal on Monday of a shareholder lawsuit that stemmed from allegations former executive David Sokol profited by violating the company's insider trading policy.

Shareholders sued the conglomerate's board for refusing to take legal action against Sokol, a former heir apparent at Berkshire.

Sokol resigned last year after disclosing he bought 96,000 shares of Lubrizol Corp and then urged Berkshire Chief Executive Warren Buffett to acquire the chemical company.

The episode has raised questions about Buffett's oversight of the conglomerate, which he has led since 1965.

Buffett said last year that Sokol violated the company's insider trading rules to score a $3 million windfall profit on Lubrizol shares, which rose by nearly a third after Berkshire announced it would buy the company.

Although Delaware Chancery Court judge Travis Laster dismissed the case, he described the claims against Sokol as really strong and said it might raise questions if the board did not pursue Sokol.

If they are not doing something with a claim like that, you have to wonder why, he said.

Laster also said the initial news release from the company disclosing Sokol's trade in Lubrizol suggested a willingness to let him slide.

However, Laster said the shareholders failed to make their argument the board was so beholden to their prestigious positions that they could not be trusted to pursue Sokol, a once-close associate of Buffett.

The shareholders wanted the right to pursue that litigation on behalf of the company in what is known as a derivative lawsuit.

Laster accepted Berkshire Hathaway arguments that the company could reasonably want to wait for the outcome of an investigation by the Securities and Exchange Commission and may still sue Sokol.

The company's attorney said he did not know the status of the SEC investigation.

Shareholders Mason Kirby and Alejandro Gonzalez were also seeking to force Buffett and other directors to compensate the company for damage to its reputation.

Laster called that claim profoundly weak.

The lawsuit was dismissed without prejudice, meaning shareholders could still file an amended lawsuit. An attorney for the shareholders declined to comment on plans to do so.

(Editing by Andre Grenon)

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