Feds eye job data release

0 Comments | Oakland Tribune, Apr 3, 2004 | by Joe Richter, Bloomberg News

Unusual trading in Treasury securities shortly before March U.S. employment data were released is being investigated by the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Labor Department, officials from those agencies said.

The 10-year Treasury note fell more than 1/2 point at 8:29 a.m. New York time, a minute before news organizations transmitted the March payroll data, which showed a gain of 308,000 new jobs during the month, far more than the 120,000 median forecast. Futures for the 10-year Treasury note expiring in June fell more than 3/4 point between 8:28 a.m. and 8:29 a.m.

Secretary of Labor Elaine Chao said the data "absolutely did not get released early" by her department.

The SEC's enforcement division is investigating allegations of early trading, an agency spokesman said. John Nester said the agency routinely looks into unusual trading before market-moving news. The CFTC is looking into the trading of Treasury futures on the Chicago of Board of Trade related to the jobs report, said Alan Sobba, director of external affairs at the CFTC.

"This is what you'd expect us to do" after prices fell and yields rose minutes before the report, Sobba said. "It doesn't happen frequently, but whenever there are questions about the release of information, we usually take a look at it."

CFTC officials have met with the Labor Department, the Justice Department and the Securities and Exchange Commission on the matter, he said.

"It's extremely serious," said Doug Warner, a broker for Man Financial Inc. at the Chicago Board of Trade. "That's not supposed to be the way it goes. The news is supposed to come out at the same time. This is a bad one."

"We are constantly monitoring our markets for inappropriate activity and investigate where warranted," said Chicago Mercantile Exchange spokesman John Holden.

Investors cited a Reuters news service report on the jobs number that was published on the Yahoo Web site at 8:28 a.m., according to the time stamp on the story.

The jobs data did not appear on Reuters' own machines until 8:30 a.m., subscribers to the news service said. Bloomberg LP, the parent of Bloomberg News, competes with Reuters in supplying financial news and information.

"We did not break the embargo," said Samantha Topping, a spokeswoman for Reuters Group Plc. "We released it when the Labor Department authorized."

Topping said a problem with a clock in Reuter's London offices put an incorrect time stamp on the story that moved on Yahoo. "The clock is being replaced," she said.

The Bureau of Labor Statistics, the agency in the Labor Department that handles the jobs figures, "has no evidence that data was released early," spokesman Gary Steinberg said. "An article was transmitted with an incorrect time stamp. The organizations involved are working on procedures to insure the accuracy of the time stamp."