Bens' Research Offers Timely Insight Amid Government Shutdown

As the federal government shutdown continues, Daniel Bens, has research that couldn’t be more relevant.

Bens is part of a research team studying how market oversight — particularly by the Securities and Exchange Commission (SEC) — is affected when funding lapses halt enforcement activity. During the last prolonged shutdown (December 2018–January 2019), the SEC furloughed 94% of its staff, leaving far fewer regulators to monitor insider trading, or trades made by company executives with access to nonpublic information.

Their analysis of thousands of stock trades found that insider trading spiked during that period, with profits increasing significantly after the first week of the shutdown when enforcement was largely paused.

The preprint study, coauthored with Gavin Cassar, Ying Huang, and Thomas Keusch of INSEAD, is currently in its second round of peer review at "The Accounting Review."

The findings are timely as the SEC once again scales back operations. Bens’ work offers valuable context on how market fairness can be affected when government oversight goes dark.

Read more about the research and its implications.