NEW YORK, April 12 (Reuters Legal) - Berkshire Hathaway's former executive David Sokol is in increasing danger of being slapped with insider trading charges for the way he handled Berkshire's efforts to acquire Lubrizol Corp while buying stock for himself, legal experts said on Tuesday.

Berkshire CEO Warren Buffett, one of the world's best-known investors, said on March 30 that Sokol was resigning as one of his top executives and that Sokol had held a $10 million position in Lubrizol at the time he suggested Buffett acquire the chemical company.

But what was not clear at the time was if Sokol knew -- before he bought his Lubrizol shares -- whether the company was taking his initial expression of interest seriously and acting on it in any way.

This was answered on Monday. Lubrizol said in a filing that Sokol was informed on Dec. 17 by Citigroup that Lubrizol's board would discuss the approach. Less than three weeks later, at around the time of the board meeting, Sokol started accumulating Lubrizol shares for his own account. (He had held a small position earlier but sold it off after a week).

One former regulator said the new information made already questionable behavior look even more troubling.

"I have had and do have a lot of problems with the conduct even before these disclosures, and these disclosures only make it worse. I also have a lot of problems with all the efforts to defend this conduct, which I think is troubling to me," said Harvey Pitt, chief executive of strategic advisors Kalorama Partners and the former chairman of the U.S. Securities and Exchange Commission.

Buffett's assistant did not respond to a request for comment.

PRESSURE MOUNTS

Since the March 30 disclosure, pressure has mounted on Sokol and on Buffett. The Securities and Exchange Commission has been looking at Berkshire's disclosure of Sokol's behavior and trying to decide whether to pursue it further, according to various media reports.

Pitt said it was understandable if the SEC was probing what happened "because the potential for insider trading strikes me as quite high."

Buffett, meanwhile, has been roundly criticized for going too easy on Sokol, his presumed heir apparent. Image experts have said Buffett looked like he was giving Sokol a free pass, praising him and saying up front he did not do anything wrong.

Sokol made about $3 million in profits after Berkshire launched its $9 billion bid for Lubrizol in mid-March, but whether he actually broke the law is still up for debate. One academic with two decades of experience in securities law said it hinges on whether what he knew was "material."

"Is there a substantial likelihood that the reasonable investor would find it important? The possibility of an acquisition does not have to be a certainty or even a near-certainty for it to be material," said Lynn Stout, a professor at the UCLA School of Law.

"The issue isn't 'did Mr. Sokol know something that Mr. Buffett didn't know,' the issue is 'did Mr. Sokol know something that the public shareholders of Lubrizol didn't know,'" she said, adding that the case fell into the "Wild West of insider trading doctrine" and was tough to judge until the full sequence of events was known.

Within banks and executive suites, there is general agreement that Sokol behaved unethically. Of 23 top U.S. investment bankers polled at last week's Reuters Global Mergers and Acquisitions Summit, 21 said Sokol should not have been trading Lubrizol shares before pitching the deal to his boss, the "Oracle of Omaha."

Similarly, nearly 78 percent of corporate leaders in an Argyle Executive Forum survey said Sokol's behavior was unethical, though only 25 percent said it was outright illegal, and 48 percent said it should be made illegal if it is not so already.

(Reporting by Ben Berkowitz)