Senate investigates Thomson Reuters distribution of monthly U-M surveys
The ranking Republican on the Senate Judiciary Committee has sent the University of Michigan a letter with questions as part of an investigation into Thomson Reuters’ distribution of a consumer sentiment index conducted by the university every month according to a report from MarketWatch.
Thomson Reuters previously announced that it will continue to release the University of Michigan-produced survey to its clients at 9:55 a.m. but will not give the information to special subscribers two seconds early.
The senate inquiries comes in addition to an investigation by the New York attorney general who is trying to determine whether Thomson Reuters’ system of releasing the information contained in the report violates insider trading regulations. The company releases the data in the report to paying subscribers at 9:55 a.m. and to the public at 10 a.m. An additional group of premium subscribers can access the information at 9:54:58 a.m. — two seconds before anyone else.
According to the Wall Street Journal, subscribers pay up to $6,025 per month for the early information. Thomson Reuters pays the university $1.1 million to conduct the survey, which includes more than 500 phone interviews conducted every month, to determine consumer sentiment in regard to personal finances, business conditions and buying conditions according to the survey’s website.
Fitzgerald previously said the agreement with Thomson Reuters complies with regulations and the index is produced with private funds.
Ben Freed covers business for AnnArbor.com. You can sign up here to receive Business Review updates every week. Get in touch with Ben at 734-623-2528 or email him at benfreed@annarbor.com. Follow him on twitter @BFreedinA2
Comments
Kai Petainen
Thu, Jul 18, 2013 : 1:33 p.m.
"From a Financial Times article, "Share Trading volumes Drop After Reuters Changes Release Schedule" by Arash Massoudi and Andrew Edgecliffe http://tinyurl.com/lpf7cez "In previous months, tens of thousands of shares were transacted by a few high-frequency trading houses, banks and other clients that traded aggressively on the market-moving data released by Thomson Reuters in the two seconds in which they had paid for an early glimpse. On Friday, that did not happen (see charts below)." "A person familiar with the investigation has said prosecutors are broadly looking at whether the early release of data to some paying clients violates the Martin Act, a New York state law that allows prosecutors to pursue fraud charges without having to prove intent.""
GoNavy
Thu, Jul 18, 2013 : 1:55 p.m.
Yep, the same pols who perform the annual kabuki dance of "We're going to investigate oil companies for gasoline price gouging." Number of firms found to be price gouging on gasoline, on an annualized basis: 0%.
dsponini
Thu, Jul 18, 2013 : 12:28 p.m.
Well, I guess this is more productive than voting to repeal Obamacare for the 38th time (and counting) this week. The GOP is so out of bounds on everything it's really laughable.
Nicholas Urfe
Thu, Jul 18, 2013 : 12:27 p.m.
Ethics? What ethics? We don't need no stinkin' ethics. We got money!!
John
Thu, Jul 18, 2013 : 12:24 p.m.
Oh so the senator who plans mass filibusters on EVERYTHING suddenly has the people in his best interest? Slimy republican http://theusconstitution.org/text-history/ 2074/bad-week-senator-charles- grassley-and-his-plan-mass- filibuster-president%E2%80%99s-dc
GoNavy
Thu, Jul 18, 2013 : 11:22 a.m.
At least the U is getting paid. This sort of thing - much like insider trading - is about as close to a victimless crime as you can get.
Chip Reed
Thu, Jul 18, 2013 : 10:42 a.m.
Since when did Sen. Grassley start basing his actions on what may or may not "be in the public interest"?
Kai Petainen
Thu, Jul 18, 2013 : 4:37 a.m.
Here's a theoretical question... If someone can get data a few seconds early for $$.... ... then what stops some fund getting data even earlier for $$$$$$ ?
GoNavy
Thu, Jul 18, 2013 : 1:53 p.m.
@Ben Freed: I can tell you that, if I were to give you market-moving information in advance of its official release, you would get the direction of the market correct less than 50% of the time. Finance is like a beauty contest: You are not picking "the most beautiful woman." Rather, you are trying to figure out who *everybody else* believes is the most beautiful woman. It is near-impossible to guess how a market will react to a piece of news until you actually begin to see the reaction. I've lived through 13 years of daily financial news releases, and at the time of every release, the market will move dramatically in both directions until it settles on the one it wants to take in the end.
Ben Freed
Thu, Jul 18, 2013 : 1:15 p.m.
GoNavy, According to the WSJ report: " Volume in a key exchange-traded fund skyrocketed to 310,000 shares in those two seconds, up from 1,000 shares in the previous two seconds. Nearly two-thirds of those trades were negative; those bets paid off when the ETF's share price fell as much as 27 cents over the next five minutes." I can see a Trading Places parallel here, getting ahead helps you make big money when the market moves in small increments.
GoNavy
Thu, Jul 18, 2013 : 12:52 p.m.
@NSider- In fact, "Trading Places" is one of my all-time favorite movies. What part of that movie were you referring to? You started out with it then shot off on some tangent about "world domination groups." Based on these two things alone, I'm not sure your arguments are totally put together. PS As far as I can tell, Ann Arbor seems to be doing just fine...I might even say "richer and richer."
NSider
Thu, Jul 18, 2013 : 12:05 p.m.
@GoNavy... Remember the movie "Trading Places"? (Dan Ackroyd, Eddie Murphy)? Now, remember the occupy movement and the 1%? The poor (those of us in the 99%) keep getting poorer while the rich (the 1%) keep getting richer. If this isn't enough to make you believe in the Bilderbergers (or other world domination group), I don't know what is. And I've said this before, ask T/R about the 500 programmer jobs in India that should be part of the Ann Arbor software group. T/R gets richer, richer, richer, Michigan and AA economy gets poorer, poorer, poorer.
GoNavy
Thu, Jul 18, 2013 : 11:23 a.m.
...And the next theoretical question is: Why should we even care? This fund is not getting life saving avian flu vaccines. It is getting the results of a survey that affect approximately 0.00001% of the population.
MyOpinion
Thu, Jul 18, 2013 : 3:59 a.m.
@Kai While the index is created with private funds, it is a component of the Index of Leading Indicators developed by the U.S. Department of Commerce. Still, Commerce puts embargoes on items like "Population Estimates" and haven't weighed in on this, so perhaps it isn't an issue for them. The next agreement with Thomson/Reuters won't be as advantageous to UM if T/R doesn't get to rake in $$ on these early viewers.
LXIX
Thu, Jul 18, 2013 : 2:35 a.m.
Rolling on the floor with laughter. Senate Investigation? Insider trading? Here is a clue for Wall Street and their congressional minions. The Index hasn't seen the light of day above benchmark 100 since the end of 2007. The NYSE is pushing an all time record high. The banks are celebrating record earnings this quarter. Even Goldman Sachs made a 100% profit increase.. The National Debt is also at an all time record high. And the Government is worried about a few grumpy consumers? After Naked shorting their gold to puff up the U.S. dollar? And prop up the big banks shakey on capital? Managed to pick my own self up off the floor. Still laughing. Or crying. Can't tell the difference anymore.
nickcarraweigh
Wed, Jul 17, 2013 : 10:38 p.m.
Sell UM goodwill short, folks, and make a bundle. You read it here first.
Kai Petainen
Wed, Jul 17, 2013 : 10:14 p.m.
"Fitzgerald previously said the agreement with Thomson Reuters complies with regulations and the index is produced with private funds." Although it complies with regulations and is made with private funds, it has the name of a public institution attached to it. 'The University of Michigan Consumer Sentiment Index' As a result, it would probably be in the best interest of ethics and public policy that: 1. The University removes its name from it and it keeps creating the information and selling it to others. Call it the 'Insert the name of a fund' that follows the information. This would make the information less prestigious, but good for money. or 2. The University keeps its name in it, and they supply the data at the same time to all. This would keep the prestige of the data.