If you read the article, the SEC states that the reason they sold is because they were forced to by law, as they were soon going to being regulators of the securities they were going to regulate.
However it does appear to be a good indication that something is coming down the line if SEC people sell...
That doesn't help either. If I have a thousand shares in BofA that become frozen, I might be tempted to go lightly on punitive damages against BofA to minimize losses to my portfolio.
"Making good on a trade" is not the goal of a rational investor. The goal is increasing one's wealth. An SEC employee divested of an asset has no greater interest in the asset being devalued merely because ey once held the asset.
Isn't that a bit extreme? I'm not saying there should be implicit trust or that there is no risk of insider trading, but still. Its not right to deny them of all rights to have other sources of income apart from their job. I mean, having to sell all their stocks of a certain company before investigation is forfeiture enough.
My two cents,
D: Some sort of anonymized peer review of transactions? Maybe even automated.
The problem with option B is that it leads to a moral hazard in SEC enforcement actions.
Selling stocks in which you're conducting an investigation discharges the conflict in pursuing the investigation, but likely accrues a gain consequent to it.
Even, say, requiring a public disclosure of investigation, then* allowing SEC staff to sell stocks, would create a conflict to the extent that the decision to conduct an investigation would have a likely known negative influence on stock holdings.
However it does appear to be a good indication that something is coming down the line if SEC people sell...