Banks including Citigroup Inc. and Goldman Sachs Group Inc., along with congressional staff members and trade groups, received potentially market-moving Federal Reserve information 19 hours before the public in a release the central bank called accidental.
Brian Gross, a member of the Fed’s congressional liaison staff, distributed the March 19-20 minutes of the Federal Open Market Committee meeting at 2 p.m. yesterday Washington time, according to an e-mail obtained by Bloomberg News. Gross referred questions to Fed spokeswoman Michelle Smith.
The release to more than 100 people was “entirely accidental,” Smith said. “This was a list of professional contacts that one individual had,” she said. “This group of individuals does not in any normal course receive any information early.” The mistake was discovered this morning, according to the central bank.
FOMC minutes, which include comments on the committee’s discussions about the direction of monetary policy and its outlook for the economy, are among the Fed’s most closely scrutinized documents as the panel debates when to stop its third round of bond purchases.
“It’s a credibility issue that the Fed should have addressed much quicker,” said Edward Lashinski, the Chicago-based director of global strategy for futures trading at RBC Capital Markets LLC, a primary dealer that trades government securities directly with the Fed. “The Fed is remiss in not taking action sooner to ameliorate potentially market-moving information being released to a select few.”
After learning of the mistake, the Fed released the minutes to news media at about 8:35 a.m. under embargo for publication at 9 a.m. in Washington instead of the planned time of 2 p.m.
Stocks rose, sending the Standard & Poor’s 500 Index 1.2% higher to a record 1,587.73 at the close of trading in New York. The yield on the benchmark 10-year Treasury note climbed to 1.80% from 1.75% late yesterday.
The Fed and the Labor Department have been at the forefront of efforts to tighten distribution of information to the media, which often operate under pledges not to release data, speeches and other news before an agreed-upon time. Bloomberg News and other news organizations last year opposed a Labor Department proposal to use government equipment for reporting economic statistics, a plan the agency said was aimed at preventing early release.