December 15th, 2014
by Jake Bernstein, ProPublica.org
A leak of potentially market moving information from the Federal Reserve became a topic of conversation in the high-level Fed group that sets monetary policy.
Responding to a Freedom of Information Act request from ProPublica, the Federal Reserve acknowledged that the leak of confidential material to an investor newsletter is referenced in nine pages of transcripts of meetings of the Federal Open Market Committee in late 2012 and early 2013.
As we reported earlier, the October 2012 newsletter by the market intelligence firm Medley Global Advisors contained detailed and closely held information about what Fed leaders were thinking and what would be in the minutes of an FOMC meeting the day before they were publicly released.
The leak upset many members of the committee, which sets central bank policies that influence interest rates and credit. The group's deliberations take place in private, but the Fed routinely releases a summary three weeks later.
After the group's September 2012 meeting, then-Chairman Ben Bernanke asked the Fed's general counsel and secretary to find out how details about the session got into the newsletter. Bernanke also asked them to look into other leaks from the September meeting that appeared in a Wall Street Journal story.
Until now, the Fed has not publicly acknowledged anything about the leaks.
In the FOIA request, ProPublica asked for "any and all references in the FOMC transcripts between October 23, 2012 and March 20, 2013 that were made by any FOMC participant (including name) relating to leaks of information" found in the Medley newsletter or Journal.
In its response, the Fed said its staff "reviewed the transcripts of the four FOMC meetings during the timeframe given in your request and located approximately nine pages of responsive information."
The Fed declined to release the material, citing a FOIA exemption for "pre-decisional, deliberative communications" by the committee. Instead, the transcripts will be made public in 2018, according to the board's long-standing policy of waiting five years, the Fed said in its response.
A Fed spokeswoman declined further comment.
Leaks to news media about FOMC deliberations are not unprecedented, but the information is usually widely disseminated. In this case, the newsletter containing the inside information was available only to Medley's private clients, who in theory could have traded on it.
Past leaks have prompted the chairman of the Federal Reserve to call in the inspector general or other outside investigative agencies. The Fed has declined to say what came of the inquiry Bernanke launched or answer other questions submitted by ProPublica.
Related stories: Read more of reporter Jake Bernstein's coverage of the Federal Reserve.
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