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.
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.
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".