WASHINGTON Jan 29 U.S. law enforcement
authorities conducted an investigation into whether media
companies facilitated insider trading by prematurely releasing
market-sensitive government data, but decided not to bring
charges, a source familiar with the probe said.
The investigation, first reported by the Wall Street Journal
earlier on Monday, looked into whether news organizations used
high-speed transmission systems to give some investors access to
economic data a fraction of a second before the official release
time, the source confirmed late on Monday.
Among the media companies investigated were Bloomberg
LP, Thomson Reuters Corp and Dow Jones & Co., a unit of
News Corp, according to the source.
Investigators launched the probe after spotting trading
patterns suggesting some traders received data slightly before
the release time; the investigators decided against filing
charges because they could not link the pattern to specific
actions by media companies, the source confirmed.
Although the probe ended without criminal charges,
investigators still have concerns about the handling of federal
economic data, according to the source. Federal Bureau of
Investigation agents focused much of their attention on
activities at the U.S. Commerce, Labor, and Treasury
departments, the source confirmed.
The source said the government agencies were briefed on the
results of the investigation about a month ago.
The Commerce and Labor departments have adopted systems in
which a master switch controls all news agency communications
lines in data "lockups" where reporters are given access to the
information ahead of public release times.
The Labor Department recently tightened its procedures by
requiring companies to use only communications equipment ordered
through the department and restricting the material reporters
can bring into the "lockup" facility.
The FBI and the Securities and Exchange Commission looked
into operations at all major government departments that release
economic data, including the Federal Reserve and the departments
of Energy and Agriculture, the source confirmed.
As part of the probe, investigators last summer asked for
Bloomberg to turn over one of their computers at the Commerce
Department, the source confirmed.
"We discovered a flaw in the Department of Commerce's lockup
system during a testing period sponsored by the Department," a
Bloomberg spokesman said. "We alerted Commerce to this flaw ...
(and) we suggested solutions to secure their system and they
thanked us for alerting them to the issue."
A spokeswoman for Dow Jones said the company was not aware
of violating an embargo on any major piece of economic data
during the past several years. "The government did not contact
Dow Jones regarding its criminal investigation or request any
equipment, and we had no knowledge of the status of the
investigation," she said.
A spokeswoman for Reuters News, the news agency arm of
Thomson Reuters, said: "We are unaware of any criminal
investigation or request for any of our equipment to be turned
over for examination."