A New Theory on Why SEC Workers Are Such Winning Stock Traders
- Law requires staff sell stock before starting investigation
- SEC employees’ returns compare to those from insider trading
Photographer: Joshua Roberts/Bloomberg
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An eerie talent for profitable trading by workers at the Securities and Exchange Commission is probably the result of laws intended to root out conflicts at the regulatory agency, a new study says.
In a report titled “Stock Trades of SEC Employees,” which echoed past findings, two professors observed that commission employees regularly pick better times to sell shares than everyone else in the market. One logical explanation is a federal law requiring investigators to get rid of shares of companies they’re looking into or recuse themselves from the case.