The Federal Reserve says it is having conversations with news organizations about whether information might have been leaked before the central bank released a key market-moving policy statement last week.
Research firm Nanex, based in Chicago, said there was high trading activity preceding last Wednesday's 2 p.m. ET statement that the Federal Reserve was not going to decrease, or taper, its massive bond-buying program. One source of these trades is high-frequency trading firms, which are increasingly under scrutiny for lightning-fast electronic trading that sucks money out of the market at the expense of small investors.
Nanex says that gold was one of the instruments with high activity in the minutes before the 2 p.m. announcement.
"This high activity preceding the release allowed us to verify that the exchange time stamps we used later were accurate," Eric Scott Hunsader, Nanex LLC founder and CEO, writes on the company's website. "It wasn't just gold. It was everything that traded."
Investors closely watch statements from the Federal Reserve and its chairman, Ben Bernanke, for insight into the economy.
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Hunsader said the 1/100th of a second after 2 p.m. was the most active 10 milliseconds in the history of the U.S. stock and futures markets.
The Federal Reserve provides information to a select group of reporters under embargo before 2 p.m. These reporters must sign and agree to the conditions of the following statement: "I understand that I may make no public use of the documents distributed by Federal Reserve Board (FRB) staff or the information contained therein, including broadcasting, posting on the Internet or other dissemination, until the time the FRB has set for their public release."
Whether the Federal Reserve could regulate information that is released milliseconds earlier has been a topic of discussion among financial media. Amanda Drury from CNBC suggested in an on-air report that one idea to prevent a situation like this in the future would be to halt trading briefly after the Federal Reserve releases information.
A Fed spokesman released a statement that said, "As is generally the case with other releases of market-sensitive information by government agencies, news organizations receiving embargoed information from the Federal Reserve agree in writing to make no public use of the information until the time set for its release. We will be conducting follow-up conversations with news organizations to ensure our procedures are completely understood."
A spokesman for the SEC declined to comment about whether it is looking into the matter.
When asked if Hunsader had suggestions for the Federal Reserve to prevent news leaks in the future, he said the central bank should learn from Labor Department's Bureau of Labor Statistics, which has dealt with leaked information previously about its monthly jobs data.
"They make sure everyone in the lock-up room cannot transmit anything out. Then they make sure whoever in there is with a legitimate news service," he said.
Hunsader said that if a news service linked any leaked information with a trading system programmed by a computer, a reporter would have needed help.
"This is not something any reporter could do," he said. "You would have to have a lot expertise of what information to encode. The Fed's statement is not just one number like the jobs report."
New York state attorney general Eric Schneiderman announced on Tuesday a confidential hotline for reporting abuses in selling early access to market-moving data and high-frequency trading.
"When blinding speed is coupled with early access to data, it gives small groups of traders the power to manipulate market movements in their own favor before anyone else knows what's happening," Schneiderman said in a statement. "They suck the value out of market-moving information before it even goes public. That's 'Insider Trading 2.0, and it should be a huge concern to anyone who cares about the markets and the free flow of capital on which our economy depends."
In July, Schneiderman announced an interim agreement with financial information provider Thomson Reuters to discontinue its practice of selling a two-second sneak peek at the University of Michigan Survey of Consumers.
ABC News' Sandy Cannold contributed to this report.