@article{a6b5f5ce62a343fea064a34336f1bdeb,
title = "Stock trades of securities and exchange commission employees",
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.",
author = "Shivaram Rajgopal and Roger White",
note = "Funding Information: We acknowledge financial assistance from the W. P. Carey School of Business at Arizona State University, Columbia Business School, Emory University, and the Goizueta Foundation. We appreciate Andrew Call{\textquoteright}s sharing his whistle-blowing data with us. This paper is the recipient of the 2014 Glen McLaughlin Prize for Research in Accounting Ethics awarded by the University of Oklahoma. We gratefully acknowledge detailed discussions with Chester Spatt (also a discussant). We thank Dhammika Dharmapala, two anonymous referees, Brad Barber, Jivas Chakravarthy, Stephen Dea-son, Patty Dechow, Stephen Fuller, Justin Hopkins, Alan Jagolinzer, April Klein, Lisa LaViers, Mike Lewis, Adair Morse, E. Kay Stice, Han Stice, Jack White, and workshop participants at the 2014 London Business School Summer Finance Symposium, the 2014 American Accounting Association annual meeting, the 2016 American Finance Association annual meeting, the 2014 Darden School of Business conference, Rice University, the University of Oklahoma, and the Indian School of Business for comments that improved this manuscript. We are also grateful to Teal Bratten of Thomson Reu-ters for her invaluable help in explaining the institutional details of the form 144 reporting environment. We thank Frank Mandic, a Freedom of Information Act (FOIA) research specialist with the Securities and Exchange Commission (SEC), for his work in collecting our data. Finally, we also appreciate the New York University Law School for making public the Securities Enforcement Empirical Database (SEED) and Ed deHaan for making public his SAS code mapping Standard Industrial Classification codes to Fama-French industry classifications. All errors are ours. Publisher Copyright: {\textcopyright} 2017 by The University of Chicago. All rights reserved.",
year = "2017",
month = aug,
doi = "10.1086/695691",
language = "English (US)",
volume = "60",
pages = "441--477",
journal = "Journal of Law and Economics",
issn = "0022-2186",
publisher = "University of Chicago",
number = "3",
}