(Reuters) - Thomson Reuters Corp (TRI.TO) (TRI.N) said it would suspend its early release of the widely watched Thomson Reuters/University of Michigan consumer sentiment data to a small group of clients.
The arrangement is the subject of a probe by New York Attorney General Eric Schneiderman, whose office requested the suspension.
The news and information company has an agreement with the University of Michigan to allow some of its clients to receive the data 2 seconds before its other clients who get the survey five minutes ahead of a wider public release.
Schneiderman said in a statement that “the securities markets should be a level playing field for all investors and the early release of market-moving survey data undermines fair play in the markets.”
Lemuel Brewster, a spokesman for Thomson Reuters, said the company’s approach to releasing data first to fee-paying clients is a widely accepted practice.
“Thomson Reuters strongly believes that news and information companies can legally distribute non-governmental data and exclusive news through services provided to fee-paying subscribers,” he said. “It is widely understood that news and information companies compete for exclusive news and differentiated content to help their customers make better informed trading and investment decisions.”
The investigation is ongoing, according to the attorney general’s statement. Schneiderman is looking at whether the early release of the information is a violation of the Martin Act, New York’s powerful securities fraud statute which has been wielded against Wall Street in a number of areas since being used in an investigation into tainted research 11 years ago.
The attorney general’s office is particularly concerned that a select few clients pay $6,000 a month to receive the data, which is issued twice a month, two seconds earlier than other clients, according to a person familiar with the matter. The office is also looking at whether releasing the information to all clients five minutes ahead of public release is proper, this person said.
The person wouldn’t say if the attorney general is looking at other companies over similar practices concerning different data. The practice of tiered distribution is routinely used by other media companies and banks publishing proprietary research.
Thomson Reuters did not disclose how much clients paid for the data or how much it paid the University of Michigan.
The probe follows a series of media reports about the early release of the data and a lawsuit by a former Thomson Reuters employee, who says he was fired for whistle-blowing activity.
Effective on July 12, all Thomson Reuters clients will receive the survey data at 9:55 a.m. EDT (1355 GMT) before it is sent out by public press release at 10:00 a.m. EDT (1400 GMT).
Reporting by Jennifer Saba and Karen Freifeld in New York; Editing by Stephen Coates, Mark Bendeich and Leslie Gevirtz