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Stock Trades of Securities and Exchange Commission Employees

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  • Shivaram Rajgopal
  • Roger M. White

Abstract

We examine the profitability of stock trades executed by Securities and Exchange Commission (SEC) employees. Subject to the considerable constraints of the data (no portfolio information, occupational details, or individual identifiers and an inability to determine profitability of trades), we find that a hedge portfolio mimicking such trades earns a positive abnormal return of about 8.5 percent per year in US stocks, driven primarily by negative abnormal future returns on sell transactions. The SEC claims that this result stems in part from employees being forced to sell stocks in a firm when they are assigned to secret investigations. We question whether this policy is reasonable.

Suggested Citation

  • Shivaram Rajgopal & Roger M. White, 2017. "Stock Trades of Securities and Exchange Commission Employees," Journal of Law and Economics, University of Chicago Press, vol. 60(3), pages 441-477.
    • Handle: RePEc:ucp:jlawec:doi:10.1086/695691
    DOI: 10.1086/695691
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    Cited by:

    1. Gerken, William & Irlbeck, Steven & Painter, Marcus & Zhang, Guangli, 2024. "Watching the watchdogs: Tracking SEC inquiries using geolocation data," Working Papers 349, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    2. Yongqiang Chu & Weida Kuang & Daxuan Zhao & Xiaoxia Zhou, 2024. "Inside job: Evidence from the Chinese housing market," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 43(1), pages 214-233, January.

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