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"Everything I do is out there for the people to judge," Buffett said during his company's annual shareholder meeting on Sunday.

"I don't hold myself to a standard of perfection or I'd have committed suicide a long time ago."

He said that with 260,000 people working for his company, Berkshire Hathaway Inc, something is going to go wrong.

Buffett, who is called the "Oracle of Omaha" and one of the world's richest men, attracts about 40,000 people a year to the city for the annual meeting of his ice-cream-to-insurance conglomerate Berkshire Hathaway Inc (BRKa.N) (BRKb.N).

This weekend he was under the microscope, facing global media as well as shareholders, regarding the Sokol incident.

And yet, Buffett's feelings toward Sokol are neither protective, nor violent.

"I know what's happened and perhaps investigative authorities will develop it more fully over time," he said.

Berkshire Hathaway is not looking into any other trades by Sokol aside from Lubrizol, Buffett said.

"I know nothing in terms of his trading activities or anything of the sort," Buffett said.

Buffett also addressed the possibility of his successor and said "it would be almost impossible" to consider a CEO from outside Berkshire.

The next chief executive does not need to be a showman or attract large crowds to an annual meeting, Buffett said.

In more than five hours of questioning from shareholders on Saturday, Buffett gave his most public comments yet on the resignation of Sokol, his one-time presumed successor who resigned in March amid a growing scandal over stock trading.

Buffett called Sokol's behavior -- allegedly misleading Berkshire about the nature of a $10 million investment in Lubrizol Corp before suggesting Buffett buy the company -- "inexplicable and inexcusable."

Sokol's lawyer slammed Buffett in a statement for making his client a scapegoat.

Buffett also addressed a share buyback program and said it would be self-defeating to buy back shares. He said he would buy back stock if Berkshire were well below the bottom range of intrinsic value.

(Reporting by Ben Berkowitz in Omaha, writing by Jennifer Saba in New York; Editing by Bernard Orr)

Tens of thousands of Berkshire Hathaway shareholders who descended on Omaha this weekend for the conglomerate's annual meeting got one unmistakable message from Buffett -- no matter how bad the economy, or the deficit, or the political divide, the United States is as good a place to live and work as ever.

"I don't see how anybody can be other than enthused about this country," Buffett told Berkshire shareholders on Saturday.

Buffett, often called the "Oracle of Omaha," is one of the world's richest men and leads a conglomerate that owns railroads, insurers and ice cream parlors.

The comments echo those Buffett made in February in his annual shareholder letter, but the words still may encourage investors looking sideways at the country, particularly after Standard & Poor's put the U.S. government's critical "AAA" credit rating on a negative credit watch.

Buffett told Reuters Insider that S&P's move was premature, given the U.S. government issues debt only in dollars and can simply print more money to pay debt if absolutely needed.

"The United States is not going to default on any obligation," Buffett told Insider in an interview after the annual meeting. "We are not a credit risk, believe me."

Where Buffett's enthusiasm wanes to any degree, it is mostly in conversation on the dollar, which he said is sure to weaken over time, like most other currencies.

Buffett, as usual, said he was shying away from fixed-income investments for Berkshire's part, even as he keeps some of his personal wealth in Treasuries for safety's sake.

Some worry that safety could be threatened by the debate over the national debt ceiling, an issue that has divided Congress in recent weeks and gotten more tense as the country gets closer to its legal limit on debt issuance.

Buffett, asked about the possibility Congress would not raise the ceiling, made one of his most-repeated comments of the whole weekend, saying it would be the legislature's "most asinine act" in its history.

Buffett also affirmed his support for the banking sector, where he has big bets on Wells Fargo and U.S. Bancorp, calling the odds of another banking crisis "very very low."

His partner, Vice Chairman Charlie Munger, was less sanguine about Europe and the effects of the sovereign debt crisis, saying the continent has "a hell of a problem" in comparison.

(Reporting by Ben Berkowitz, editing by Maureen Bavdek, Bernard Orr)

Robust corporate earnings and the Federal Reserve's promise to keep liquidity cheap have fueled the Nasdaq to a 10-year high and driven the Dow and the S&P to their highest levels since 2008.

"We are clearly seeing signs of overbought conditions but there is still a lot of optimism, especially after the S&P broke well above the 1,340 range. The next ceiling is really not until the 1,400 level," said Stephen Massocca, managing director of Wedbush Morgan in San Francisco.

Heading into May, a seasonally weak month for stocks, the Dow and the Nasdaq posted their best monthly performance since December. At Friday's closing bell, the S&P 500 was up 8.4 percent for the year.

With earnings season coming to an end, investors will shift their focus to economic data next week, especially the April employment report on Friday. Investors will scrutinize the jobs data for signs of improvement in the labor market.

After a mixed batch of data this week, investors would need to see a solid gain in jobs to believe in sustainable economic growth. Nasdaq's rebalancing of its index may also cause a bit of a stir in the market next week.

But despite the concerns, options investors were buying less protection against a market correction, according to James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.

"It's surprising, but ironically, the put-to-call ratio on S&P 500 rose late last week and early this week, but fell in the last few days," he said.

"We might see some reaction to the overbought conditions depending on the jobs number, but still, that would be a minor pullback, maybe down to test the 1,340 levels."

Other economic data due next week include the ISM manufacturing data and domestic car sales on Monday, the ISM services-sector data on Wednesday, and weekly jobless claims on Thursday.

NASDAQ REBALANCING

Nasdaq will be rebalancing its benchmark Nasdaq 100 index on Monday that will slash Apple Inc's (AAPL.O) weighting. The rebalancing will affect the relative weights of all the securities in the index and cause popular index-tracking funds such as the PowerShares QQQ (QQQ.O) to buy and sell shares to match the new composition.

"Apple shares are likely to see some volatility, but unlike 10 years ago, hedge funds and traders start trading on this (the rebalancing) from weeks ahead, so it won't be a huge event on the overall market," said Jack DeGan, chief investment officer of Harbor Advisory Corp in Portsmouth, New Hampshire.

The CBOE Volatility Index or VIX .VIX, Wall Street's so-called fear gauge, was relatively low, ending Friday's session below 15, although it was up 0.9 percent for the day.

"While conditions of being overbought and oversold can stick around for a while, as a trader, I feel this market is just too complacent. That is why I advocate looking at insurance, but also at this stage in the wave, ride it and not try to swim against it," said Joe Cusick, senior market analyst at Chicago-based online brokerage firm optionsXpress.

The VIX usually moves inversely with the S&P 500, tracking options prices that investors are willing to pay as protection on the price moves of the underlying stocks.

So far, 324 of the S&P 500 companies have reported earnings, of which 73 percent were above analysts' expectations, according to Thomson Reuters data. In a typical quarter, 62 percent of companies beat estimates.

(Reporting by Angela Moon; Editing by Jan Paschal)

One of the focal points of Berkshire Hathaway's (BRKa.N) annual meeting weekend is the Friday night cocktail party at Borsheims, the country's largest independent jewelry store and one of the many businesses in Buffett's ice-cream-to-insurance conglomerate.

The young and the old mingled freely among display cases laden with diamonds at 20 percent off, and many took advantage of the discounts. One thing that was not discounted, though, was the loyalty of Nebraskan shareholders to Buffett, beloved as the hometown kid with the folksy manner.

"I think he's been handling it very well ... I think he's done a nice job of addressing the issue but also recognizing that it's a difficult one," said Amy Peck of Omaha, a shareholder who was visiting with her dog Bosley in tow.

Peck was hardly alone; most smaller shareholders in Omaha simply feel differently about the controversy surrounding David Sokol's behavior than some institutional holders do.

Even if they expect answers from Buffett about Sokol this weekend, they still fundamentally believe in the man some call the "Oracle of Omaha." One investor choked up when asked about Berkshire after Buffett is no longer in charge.

"In my opinion Warren Buffett is Superman," said Ernie Fierro of Omaha, who has been attending the annual meeting for the last five years.

This aura of invincibility is what keeps investors coming back year after year. In fact, Buffett has said he'll never retire, and suggested he'll work until he dies.

Others made no effort to hide their adulation for the 80-year-old and their eagerness to buy Berkshire's stock -- even four-legged investors.

"You know what, that's not a bad idea, maybe we'll have him buy some shares too," Peck said of her dog.

Not everyone shopping at Borsheims on Friday was a small investor, though. Baba Blumkin of Los Angeles, a descendant of the family that founded Buffett's retailer Nebraska Furniture Mart, was browsing some of the store's higher-end offerings.

Blumkin, who grew up attending Berkshire's annual meetings, agreed Buffett had handled the situation well. Yet, asked what he would ask Buffett if given the opportunity, Blumkin had a slight less pragmatic question than most.

"Is it fun hanging out with LeBron James?" he said.

(Reporting by Ben Berkowitz, editing by Bernard Orr)

The European Commission, the EU's executive body, said it is probing whether major investment banks, including Goldman Sachs and JP Morgan, colluded in their operations in a market that is already under scrutiny by U.S. authorities and being subjected to broad, new regulations.

Credit default swaps, or CDS, are derivatives that let a buyer transfer loan default risk to a seller, making them a kind of insurance against default. CDS can also be bought by speculators without direct interest in the debts involved.

CDS played a central role in the near collapse of AIG in 2008, which led to a massive U.S. taxpayer bailout of the former insurance giant. The contracts have also been at the heart of the debt crisis engulfing some weaker EU states.

The EU probe comes as the 27-nation bloc struggles, along with the United States, to complete a government crackdown under way for months now on the broad, $600 trillion off-exchange derivatives markets, including CDS.

"CDS play a useful role for financial markets and for the economy," said the EU's anti-trust commissioner, Joaquin Almunia, in a statement announcing the two-track inquiry.

"Recent developments have shown, however, that the trading of this asset class suffers a number of inefficiencies that cannot be solved through regulation alone," he said.

Almunia added that a lack of transparency could lead to abusive behavior and that he hoped the probe would improve financial markets and aid economic recovery.

The U.S. Justice Department in 2009 launched an inquiry into anti-competitive practices in the trading, clearing and pricing of CDS in the United States. A spokeswoman for the U.S. Justice Department declined to comment on the EU move.

Unlike other derivatives, such as grain or metal futures, credit derivatives are risk transfers. "It's a banking function that's been converted by this small group of banks into a trading instrument," said Karen Shaw-Petrou, managing director at consulting firm Federal Financial Analytics.

"The problem is no one knows what anything is worth unless or until the entity against which the CDS is placed defaults ... That's what makes it very opaque," she said.

GREEK CRISIS

In Europe, CDS moved to center stage last year as Greece grappled with higher borrowing costs, blaming the move on speculators raising default insurance costs.

The European Commission, which regulates competition in the EU, said it would investigate whether 16 investment banks had colluded or abused a dominant market position.

The opaque CDS market, where industry players say the only record of some multimillion-euro deals is just a fax, has frustrated politicians who have struggled to understand it because there are few central records of trading.

"It is not a transparent market," said Shaw-Petrou. "It's a liquid market ... but there's no real proof of value other than moment-to-moment exchanges that are then impossible to verify because it's not a public exchange."

The probe could hit banks' bottom lines as the EU can fine companies up to 10 percent of revenues and has handed out penalties as big as 1 billion euros ($1.5 billion).

Analysts said CDS trading was too concentrated. "Eighty percent of derivatives transactions on both sides of the Atlantic are done by about eight banks," said Karel Lannoo of the Center for European Policy Studies, a think tank.

EU countries and the region's parliament are trying to agree how to revamp derivatives market rules, with some lawmakers calling for outright bans on speculative CDS trading. Such calls were heard two years ago in the United States, but major CDS dealers were able to silence them.

Instead, the 2010 Dodd-Frank reforms of financial regulation mandated the first comprehensive U.S. regulation of off-exchange derivatives, including CDS. The legislation is now being implemented by regulatory agencies.

The reforms mandate standardization and increased trading on exchanges or electronic platforms of derivatives. For instruments ill-suited to this, more use of central clearinghouses and disclosure of transactions is required.

A comparable level of detail has yet to emerge from EU debates about derivatives oversight, leading to some concern among regulators that momentum behind global reforms could slow amid divergent regional regulatory approaches and stiff resistance from banks defending their business models.

MARKIT EYED

The European Commission said it will also investigate any collusion by Markit, which provides prices and whose shareholders are the 16 banks. Markit denied any inappropriate conduct.

"Markit has no exclusive arrangements with any data provider and makes its data and related products widely available to global market participants," it said in a statement.

The EU said it would investigate nine of the 16 banks and ICE Clear Europe, a CDS clearinghouse owned by exchange operator InterContinental Exchange, to see if preferential tariffs given to the banks hurt competitors.

The 16 banks being examined are: JP Morgan, Bank of America Merrill Lynch, Barclays, BNP Paribas, Citigroup, Commerzbank, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, Morgan Stanley, Royal Bank of Scotland, UBS, Wells Fargo Bank/Wachovia, Credit Agricole and Societe Generale.

The banks named either declined to comment or were not immediately available.

(Additional reporting by Arno Schuetze in Frankfurt, Emma Thomasson in Zurich, Kevin Drawbaugh, Sarah Lynch and Diane Bartz in Washington and William James in London; editing by Rex Merrifield and Alexander Smith, Gary Hill)