How SEC Mobile Phones Can Signal an Imminent Stock Price Drop

Mobile phone location data has linked site visits by US securities watchdogs to the headquarters of companies with measurable drops in their share prices -- even when no enforcement action is taken. From a report: When insiders sold shares right around a non-public visit by staff from the Securities and Exchange Commission, they avoided average losses of 4.9 per cent in the three months after the visit, according to a study led by researchers at four Midwestern universities. By matching commercially available data with share price moves, the study offers a window into the secretive world of securities enforcement beyond publicly announced cases. It also raises questions about the rules around insider trading.

'Maybe we should be thinking about what the rules are when the SEC shows up,' said Marcus Painter, assistant professor of finance at Saint Louis University and one of the authors. The research used geolocation data to identify mobile phones that spent significant amounts of time at the SEC's various offices around the country. They then tracked those phones to corporate headquarters around the world in the 12-month period right before Covid-19 lockdowns led to extensive working from home.

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