Security and Exchange Commission employees are required to sell any stock they own in a company when beginning an investigation into that company. Since such an investigation can only lead to bad or neutral results for the company in question, the requirement to sell naturally leads to employees making a boatload of money.

Here is an investment strategy for you:

Buy all the stocks in the S&P 500 index, weighted by market cap.
Any time the Securities and Exchange Commission opens an investigation into one of those companies, sell its stock.1
That's it! I feel like that would be a good strategy, right? All the benefits of indexing, plus you get to occasionally trade on inside information. Oh, right, for this strategy to work, obviously, you'd need to know about SEC investigations as soon as they start; you can't just wait until the investigations are public.

So I guess the downside of this strategy is that, to use it, you need to work at the SEC. The upside, though, is that if you work at the SEC, this strategy is totally fine!

More than "totally fine", this investment strategy is basically required.

It's obvious that SEC employees should not be allowed to own individual stocks, and I'm quite surprised to find out that isn't the case. Government regulators should in general be prohibited from benefiting from their insider knowledge.

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