The incredible stock-picking ability of SEC employees

Washington Post ^ | February 27, 2014 | By Jia Lynn Yang

[Brad from Tennessee]

Forget hiring a top hedge fund to manage your portfolio. Your better bet might be an employee at the Securities and Exchange Commission, according to a new report suggesting that regulators are trading on inside information relating to investigations and upcoming enforcement actions.

In the report titled "The Stock Picking Skills of SEC Employees," researchers found that SEC employees' stock purchases look like your average person's. But when these employees sell their stocks, they appear to systematically beat the market by making sales within weeks of costly enforcement actions by the agency.

"These results suggest that SEC employees potentially trade profitably under the new rules, and that at least some of their profits potentially stem from trading ahead of costly SEC sanctions and on privileged non-public information," write Shivaram Rajgopal, a professor of accounting at Emory University, and Roger M. White, a doctoral student in accounting at Georgia State University. "In short, it appears that SEC employees continue to take advantage of non-public information to trade profitably in stocks under their regulatory purview."

A spokesperson for the SEC, which has made crackdowns on insider trading a priority in its enforcement division, declined to immediately comment. . .

[JimRed]

Take ‘em out back and shoot ‘em!

[JimRed]

...when the SEC employees start selling, sell your holdings.

Where would one find this information? Is there some public record of who sold stock that you or I could access?

[Hardastarboard]

I don’t know, but I would think it would have to be a matter of public record since they’re members of the SEC itself. I did a quick check and didn’t find anything and then of course realized that, just like everything else, the government probably exempts itself from that kind of reporting.