SEC Employees Caught Trading on Non-Public Information?
What happens when the people who are charged with preventing insider trading (and other offenses) are engaging in the act themselves?
The Associated Press is reporting that federal prosecutors and the FBI have been investigating "possible" illegal insider trading at the SEC.
The investigation centers on two Securities and Exchange Commission (SEC) enforcement attorneys who may have been engaging in insider trading for a number of years.
Based on the article that I read (link here), the evidence against the two seems to be pretty substantial.
One of the attorneys under investigation reportedly traded stocks 247 times in 2006 and 2007.
The article states that both attorneys traded shares of a "large financial company" AFTER being told by a colleague that the company was being investigated.
In another instance, one of the attorneys dumped all of the shares that she owned in a company just a short time before an investigation of the company was opened by the SEC.
The two attorneys apparently emailed each other "often" about stocks that they were trading.
Both attorneys reportedly made over $160,000 per year from their jobs as SEC enforcement attorneys.
These allegations, if proven to be true, would obviously be yet another black eye for the SEC.
The SEC has been under attack in recent years due to their missteps in handling the Bernard Madoff case, and various other mistakes and slip-ups.
I can't say that I'm really surprised that someone at the SEC is being accused of insider trading.
The temptation to engage in this nefarious practice must be overwhelming for some of the employees at the agency who are privy to information of upcoming investigations.
I mean, who in the world has access to more non-public information than the SEC?
The SEC needs to do a top-to-bottom investigation of the employees who had access to this type of information, no matter what the cost is. The public needs to have some faith that the SEC is acting in their best interests.
I'm not sure that SEC employees with access to this type of information should be allowed to buy or sell shares of any individual company. It just doesn't seem right to me, and can lead to many potential problems.
I'll be interested to see where this investigation leads.. not very good news for the SEC.
Filed under: Stock Market Scandals