Suspicious Stock Trading By SEC Staff: Who Guards The Guards?

From Bloomberg, "Study Finds SEC Staff Sold Shares Before Settlements Made Public" by Dave Michaels:

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.***"It does suggest it is likely, or probable, that something is going on," he said.***‘Circumstantial Smoke’

"All we can do is show some statistical, circumstantial smoke, and we don’t know if there is really a fire,” Rajgopal said. Still, he added, “It’s not clear why we should find this pattern by sheer chance."