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The incredible stock-picking ability of SEC employees
Washington Post ^ | February 27, 2014 | By Jia Lynn Yang

Posted on 02/27/2014 10:26:23 PM PST by 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. . .

(Excerpt) Read more at washingtonpost.com ...


TOPICS: Extended News
KEYWORDS: fraud; sec
John Kerry made $2 million trading on confidential information he acquired as a member of a Senate committee.
1 posted on 02/27/2014 10:26:23 PM PST by Brad from Tennessee
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To: Brad from Tennessee

some of you people voted for this...


2 posted on 02/27/2014 10:31:10 PM PST by cherry
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To: Brad from Tennessee

The fedgov is utterly, completely, and irrevocably corrupt.


3 posted on 02/27/2014 10:31:46 PM PST by 43north (BHO: 50% black, 50% white, 100% RED.)
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To: Brad from Tennessee

The bigger a government becomes, the more corrupt it becomes as well

And we have a HUGE government.


4 posted on 02/27/2014 10:46:44 PM PST by PGR88
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To: 43north

Nothing to see here, folks. Move along.


5 posted on 02/27/2014 11:10:04 PM PST by alpo (What would Selco do?)
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To: Brad from Tennessee

Maybe Hillary is helping them with this. She seemed to have a sixth sense when it came to trading cattle futures...


6 posted on 02/27/2014 11:49:47 PM PST by fhayek
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To: 43north

Yesterday we had the article about thieving treasury employees. Feds declined to pursue charges. This won’t be any different.


7 posted on 02/28/2014 12:10:39 AM PST by wiggen (The teacher card. When the racism card just won't work.)
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To: Brad from Tennessee

8 posted on 02/28/2014 12:20:44 AM PST by hosepipe (This propaganda has been edited to include some fully orbed hyperbole..)
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To: Brad from Tennessee
Update: The SEC says it has an explanation. "Each of the transactions was individually reviewed and approved in advance by the Ethics office," said John Nester, spokesperson for the SEC. "Most of the sales were required by SEC policy. Staff had no choice. They were required to sell."

Nester explained that before staff can work on an issue that involves a company, they have to sell any holdings of stock in that firm. As a result, he said, there shouldn't be any surprise that a sale would precede the announcement of an enforcement action.

I understand the rationale, but this is still a nice trick. Maybe SEC employees should be limited to widely held mutual funds. Or put their money into blind trusts.

9 posted on 02/28/2014 2:18:54 AM PST by sphinx
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To: sphinx
*snickering*..good luck w/ that, as long as Congress can
influence any financial device, there shall be Corruption.
You wonder how an vampant/stinking whores like Pelosi/Fineswine can access so
much $$$$, rem: the news-magazine showing that Congress regularly disregards
the stautes regarding ethics.

10 posted on 02/28/2014 2:46:18 AM PST by skinkinthegrass (The end move in politics is always to pick up a gun..0'Caligula / 0'Reid / 0'Pelosi)
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To: sphinx
Nester explained that before staff can work on an issue that involves a company, they have to sell any holdings of stock in that firm.

The way I would interpret that is that whenever the government (SEC) starts getting involved in a company, that company will suffer ("I'm from the government, and I'm here to help you.") and so if the SEC is going to come knocking, it's best to sell. And so the SEC wrote that into their rules to make sure their employees can always "ethically" sell at just the right time.

11 posted on 02/28/2014 3:23:55 AM PST by ClearCase_guy
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To: Brad from Tennessee

America - funded by the PEOPLE for the EXEMPT and
their terrorists and their schemes which are ILLEGAL
for the NON-EXEMPT.

America - 5 classes under “law” that depends on skin color,
party affiiliation, and job.

At the top: The EXEMPT (Congress, pOTUS, SCOTUS, Moslems)

Below THEM: Blacks above all “laws”

Below THEM: Terrorists above all “laws”

Below THEM: Federal Employees

Below THEM: Criminal Illegals

Below THEM: White, hispanic, and asian American taxpayers as the new slaves.


12 posted on 02/28/2014 3:52:29 AM PST by Diogenesis
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To: Brad from Tennessee

I’m shocked, shocked...I tell you!


13 posted on 02/28/2014 4:26:05 AM PST by MeneMeneTekelUpharsin (Freedom is the freedom to discipline yourself so others don't have to do it for you.)
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To: sphinx
this is still a nice trick.

You're being way too polite. This is no different than theft under the color of law. "You have to sell your holdings in this company before you gut them. Congratulations on being assigned to the case."

It essentially allows the SEC employee to get out from under what is going to be a less valuable stock because of litigation, in advance, for a legal reason. The rest of us should be so "lucky".

Maybe the way to deal with this is to watch company stock sales, and when the SEC employees start selling, sell your holdings. Of course, then they'd come after you for selling based on "insider information".

14 posted on 02/28/2014 4:35:39 AM PST by Hardastarboard (The question of our age is whether a majority of Americans can and will vote us all into slavery.)
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To: Brad from Tennessee
John Kerry made $2 million trading on confidential information he acquired as a member of a Senate committee.

That's better than Hillary Clinton's massively brilliant future's trading. Those democrats sure are impressive.../s

15 posted on 02/28/2014 4:47:49 AM PST by GOPJ ({David} "Gregory, usually as alert and twitchy as a squirrel, flat-lined." Richard Cohen NYT)
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To: Brad from Tennessee

Hell, John Kerry’s wife, dead republican Senators former wife, makes that much every day on her dead husband’s fortune. Kerry has been living tall on the money of one of his republican betters.


16 posted on 02/28/2014 4:54:51 AM PST by billhilly
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To: Brad from Tennessee

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

Well, that’s because there’s an ongoing investigation...

There will ALWAYS be an ongoing investigation.


17 posted on 02/28/2014 5:10:45 AM PST by The Antiyuppie ("When small men cast long shadows, then it is very late in the day.")
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To: Brad from Tennessee

I’m shocked — shocked I tell you — shocked


18 posted on 02/28/2014 5:12:07 AM PST by Uncle Chip
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To: Brad from Tennessee
I'm shocked that anyone who works for the SEC or their families can trade stock. And anyone who benefits from their knowledge should go to jail for at least as long as Marth Stuart did.

Our government is more out of control than a lot of the governments that have been overthrown for being out of control.

19 posted on 02/28/2014 5:20:21 AM PST by grania
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To: Brad from Tennessee

The dirty little secret about the Oil for Food Program, it was a giant insider trading scam.

The $65 billion everyone was worried about was nothing but chump change, the cost of doing business.

The real money was in the hundreds of billions at least.


20 posted on 02/28/2014 5:52:17 AM PST by IMR 4350
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To: Brad from Tennessee

Take ‘em out back and shoot ‘em!


21 posted on 02/28/2014 7:46:01 AM PST by JimRed (Excise the cancer before it kills us; feed & water the Tree of Liberty! TERM LIMITS NOW & FOREVER!)
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To: Hardastarboard
...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?

22 posted on 02/28/2014 7:50:25 AM PST by JimRed (Excise the cancer before it kills us; feed & water the Tree of Liberty! TERM LIMITS NOW & FOREVER!)
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To: JimRed

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.


23 posted on 02/28/2014 8:27:51 AM PST by Hardastarboard (The question of our age is whether a majority of Americans can and will vote us all into slavery.)
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