Fed watchdog to complete audit of early minutes release in Q2

NEW YORK/ SAN FRANCISCO Fri Apr 26, 2013 12:48pm EDT

NEW YORK/ SAN FRANCISCO (Reuters) - The Federal Reserve's inspector general expects to complete this quarter an audit into the early release of minutes of the central bank's most recent policy-setting meeting, according to the watchdog's work plan posted on Friday.

The release, which the Fed has said it believes was accidental, was the central bank's worst security lapse in years. Minutes of the Federal Open Market Committee's meetings can be market-sensitive, and some of the recipients of the minutes, a full day early, were at banks.

"The objective of this audit is to review the processes for distributing FOMC minutes to Federal Reserve staff and evaluate the Board's management controls to prevent the early release of those minutes," the inspector general said in its work plan.

Some 154 people, primarily congressional staffers and employees of trade associations, had received the minutes of its March policy meeting around 2 p.m. (1800 GMT) on April 9 - about 24 hours before their scheduled public release.

The minutes were contained in an email from a member of the Fed's congressional liaison staff.

The list also included people employed at Wall Street banks, including Goldman Sachs, Barclays Capital, Wells Fargo and Citigroup, which regularly trade on new information about U.S. monetary policy.

Contacted by Reuters in the days following the release, several of the recipients said they were not even aware they had received the minutes early until after the Fed publicized the error.

"I saw the email and filed it to read later," said one Congressional staffer. Said another recipient in the political line, "I don't know what I would do with it. I wouldn't even know where to begin. It's pretty obscure information."

Other recipients who worked at banks referred inquiries to public relations staff, who declined to comment. At least two of the recipients said neither the Fed nor regulators had reached out to them to ask questions

After discovering the breach early on April 10, the day of the scheduled release, the Fed decided it would publish the minutes at 9 a.m. (1300 GMT), about five hours earlier than usual.

"Every indication at this time is that the early release of the minutes was entirely accidental," a Fed spokesman said at the time.

(Reporting by Ann Saphir and Jonathan Spicer; Editing by Chizu Nomiyama)


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