Thanks to fine work by the audit committee of Berkshire Hathaway Inc., we have penetrated to the nub of the David Sokol contretemps with Warren Buffett. Sokol, said the committee (actually, to be candid, law firm Munger Tolles, which did the work, not including a chat with Sokol), violated his Duty of Candor. Sokol did not disgorge every detail of how he bought Lubrizol shares. Buffett, famously, did not ask. How could he interrogate Sokol about a situation he never suspected existed? Buffett is a busy guy; and he's 80. But what is this Duty of Candor, which sounds serious, particularly since it was accompanied by a vague threat that Berkshire Hathaway could seek redress from Sokol in the Delaware courts. Legally speaking, a Duty of Candor exists in U.K. law (actually, the Duty of Candour), and involves public authorities and litigation, and in U.S. patent law (Rule 56 for the cognoscenti), which deals with disclosure (hat tip: Wikipedia). Delaware corporate law has a raft of duties that define fiduciary responsibility for directors: good faith, care and loyalty. Delaware judges exist to parse the fine points and relations of these duties, and the report insists that a Duty of Candor is a subset of the Duty of Loyalty and thus applicable to "a corporate representative" like Sokol.

Candor? Care? Loyalty? What's a little legal metaphysics between friends? In an Oprahesque democracy where reputation is the coin of the realm, there should be a Duty of Candor. There could be a Duty of Candor cable channel, where celebrities reveal everything deemed appropriate by the studio audience. There could be Duty of Candor blogs, tweets, stock indexes. We could have Duty of Candor pundits who wonder daily why certain questions have not been asked, why transcripts, school records and birth certificates remain elusive, and why folks who appear Windex-transparent are probably, almost certainly, hiding something. The Duty of Candor could be grafted onto corporate law, mandating that directors tell each other secrets around the mahogany table: lechery, dipsomania, wiretapping. Then leak them. Of course, all this has the loosest connection to fiduciary duties in, say, M&A transactions or, for that matter, to Duties of Loyalty. In fact, with the exception of Delaware, the Duty of Candor already seems to thrive in our, ahem, public discourse.

The true subject here, of course, is reputation. Many have commented on the irony that Buffett, who has reflected on the subject and produced, like a See's Soft Center chocolate, moral bons mots upon it -- "It takes 20 years to build a reputation and five minutes to ruin it" -- is getting his rep wrung. Buffett may be a god of investing, but as CEO he's as exposed to the studio audience as the rest of us, only more so because he's famous, rich, he holds court to multitudes like the pope, and he leaves an incriminating trail of sayings behind him. Buffett perfectly captures the tension that exists between candor and reputation. Candor is a brick in the creation of reputation for nearly everyone except killers and Wall Streeters. His folksy sayings, his TV rambles, his capitalist clambake, his Will Rogers-like annual report, all contribute to a towering rep for personal probity, Cherry Coke values and split-level genius; share performance doesn't hurt either. But over the years the demands on candor only escalate; folks want to know, which explains Alice Schroeder. And the greatest threat to keeping up that reputation, which like any edifice gets struck by lightning and crapped on by birds occcasionally, is a perceived failure of candor. Reputations can survive nearly anything (see Donald Trump) except stonewalling and cover-ups (see Richard Nixon). Confession is one of the Duties of Candor -- though as many a Catholic priest or Freudian note taker sighingly knows, confession may be a swamp without end.

Some pessimists look at reputational bear markets in stocks like Buffett or Wall Street and say, "Reputation no longer means bupkis in this self-interested, utility-maximizing republic of ours." Look at Goldman, Sachs & Co., which has displayed as much penitence as Mount Rushmore. Goldman, a proxy for Wall Street and a pal of Warren, refuses to open the door to its cinder block heart. Tiger Woods abased himself; Lloyd Blankfein made jokes; Buffett defers to lawyers. But Goldman, like Buffett, will inevitably succumb; confession and apologia will occur when a) there's no cost not to or b) no choice. So reputation is not dead in America. It simply has to be continually revived like a Facebook page. No one needs to be down and out forever -- hell, Bernie Madoff's making a comeback that Barry Bonds should pay attention to -- as long as the reputatee accepts the vicissitudes of fame, and takes seriously the Duties of Candor.