WASHINGTON (Reuters) - 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.”
Reporting by Timothy Ahmann; Editing by David Brunnstrom