Playing or Not

I sit for a five year old and have a daughter eight and a son ten. The other night I overheard the kids laughing, I walked in and my older son was watching TV and my daughter was in bed, but under the covers was the five year old, and he was taking off her panties. I asked them what was going on, they both said "I dont now" this is not the first time with the five year old, and I have talked to his mother.
I have also explained to my daughter good touch and bad. She said he did not touch her. How do I handle this?

[LRM1021]

It sounds like exploration, but I completely understand your desire to make it stop. You need to lay out firm, clear ground rules for behavior-- explaining that this type of behavior is not allowed. You need to then advise the other child's mother of what happened, and that you have explained the rules to the children, and will be watching very closely to make sure this does not occur. Whatever discipline methods you use you should be prepared to apply if they do not follow the rules.  I believe them when they say they don't know-- I don't think that children do understand about these things. But I also think its important to let them know that the behavior is not appropriate, and make sure they understand that it will not be tolerated.
My 5 year old was caught kissing his 7 year old babysitter's grandaughter-- and I mean "kissing." We all had a talk with the kids- explaining that "playing boyfriend and girlfriend" and any type of "grown up kissing" was not something that children should be doing, and that this should not happen again. They knew we were serious, and never did it again. I know it was innocent -- so I did not make a big deal about it-- but I also wanted them both to know that this was not appropriate (mostly so that if an adult ever did this, they would know it was not appropriate!) It worked.