Oh now isn’t this rich: The SEC, stung by its failures in the biggest scam of all time (the Bernard Madoff Ponzi scheme), is hellbent on a search-and-destroy mission to mete out and vanquish all insider trading.
Now a new report shows SEC staffers themselves are extremely effective insider traders.
Researchers looked at 56 enforcement actions at the SEC and found that in six cases—more than 10% of the time—SEC employees had traded in the stocks just before enforcement actions against those companies were announced.
In 2010-11, even after the Securities and Exchange Commission had adopted rules aimed at discouraging conflicts of interest in its own staff, SEC workers bailed out of five target stocks hit by six investigations. The six cases involved General Electric (two cases), Bank of America, Citigroup, J&J and JPMorgan, the Washington Post reports. Story is here: http://wapo.st/1mJFeCD
In stock trades done 30 days or less before the SEC announced a penalty, SEC employees magically sold out of those stocks 74% of the time—vs just a 50% sell rate in the market over all.
The Post says an SEC spokesman first declined to comment on the new report, by Shivaram Rajgopal of Emory University and Roger M. White of Georgia State. Later came a new SEC stance: that the stock-sales were approved by the agency’s ethics office, and most were “required by SEC policy.”
Before SEC sleuths can start a probe of a company, they must sell any holdings of stock in that firm. That sounds like a policy that blatantly encourages the insider trading it seeks to ban. Why aren’t SEC staff forbidden from owning ANY stocks, as a condition of employment?
This is an agency that, in the past, has so vociferously pursued insider-trading allegations that it prosecuted a bartender who heard a fourth-generation rumor . . . and went after Martha Stewart for fibbing about a call from her stockbroker.
Yet its own staff is allowed to sell out of a stock knowing the agency is about to launch an investigation. And even after this new report, the SEC likely will do nothing to investigate the behavior of its own bureaucrats—but you can bet it will be knocking on your door anytime the slightest aspersion is cast.
This is the Imperial Bureaucracy on parade. Do as we say, not as we do.
Thus government forces all of us to buy health insurance, then decides which of us don’t have to meet the deadline. Congress forces Obamacare on the nation, then exempts its own staff. Big business is forced to offer insurance, yet exemptions are granted to dozens of union locals that helped re-elect the President. The EPA imposes draconian limits on utilities’ carbon emissions, then grants waivers to Obama friends. The IRS disavows Tea-Party targeting as a mistake, then proposes new crackdown regs that would make this same behavior the rule.
Once upon a time, there was an obnoxious and free press that brought the government to heel, a platoon of journalists who called out the President for exactly this kind of hypocrisy and imperialism and arbitrariness.
Wow… wonder whatever happened to those scribes?