Insider Trading Regulator Practicing Insider Trading?

A study cited by Bloomberg uncovers some fishy transactions by some personnel of the US SEC:

People working for the U.S. Securities and Exchange Commission who owned stock in companies under investigation were more likely to sell shares than other investors in the months before the agency announced it was taking enforcement actions, according to a new academic paper.

SEC employees holding shares of five firms including JPMorgan Chase & Co. and General Electric Co. (GE) in 2010 and 2011 sold stock in 62 percent of the trades they initiated, compared with 50 percent among all the investors who traded those shares in that period, Emory University accounting professor Shivaram Rajgopal reports in the paper.

Rajgopal, who plans to present the work today at a University of Virginia accounting seminar, said in a telephone interview that while the analysis doesn’t prove misconduct it points out a suspicious pattern.

“It does suggest it is likely, or probable, that something is going on,” he said.

The records, obtained from the SEC under a Freedom of Information Act request by Rajgopal and his co-author, Roger M. White, a doctoral student at Georgia State University, don’t identify individuals.

The limitation means the researchers couldn’t tell if an individual trader made or lost money in a transaction. They also couldn’t discern if those trading worked in jobs where they might have advance knowledge of actions that could push stock prices lower.

If true then this shows how regulators think they operate above the law, how they use their positions or even actions (via imposition, administration or enforcement of policies) for personal benefit, and or perhaps even coop with corporate insiders again for their personal benefit. 

Of course the SEC dwarfs the world’s biggest insider trader, the US Federal Reserve and her central banking peers, who manipulate the markets in order to boost the interests of the allies/cronies.