When can a media company be considered a dispenser of “inside trading information?”
Matt Levine writes: This Wall Street Journal article begins “A high-profile investigation into a leak of sensitive information from the Federal Reserve in 2012 has escalated to an insider-trading probe led by a key market surveillance agency and federal prosecutors in Manhattan, according to people familiar with the matter,” and it is always fun to wonder who those people are. I suppose it is possible that they work for the target of the probe, “macro policy intelligence” firm Medley Global Advisors, but that seems unlikely; later in the article a Medley spokesman is quoted on the record. So that leaves … the investigators? Leaking news about their investigation into leaks of news? The irony is compounded by the fact that this investigation is into information about Fed deliberations that were apparently leaked to Medley only after they were leaked to the Journal:
The important details of the Fed’s internal deliberations at the September meetings were supposed to be disclosed by the Fed in early October.
Before that happened, The Wall Street Journal published a story reporting that Fed officials at the September meeting were considering further action to stimulate the economy. The Sept. 28 story said there was a “strong possibility” the Fed would begin purchasing large amounts of Treasury bonds.
The next week, Medley sent a research note to its clients saying with more certainty that the Fed was “likely to vote as early as its December meeting” to begin monthly purchases of $45 billion worth of Treasury bonds.
Medley is fighting the investigation on the grounds that it is a media organization, and publishing news can’t really qualify as insider trading. Medley, though, is the sort of media organization that sells expensive subscriptions to fewer subscribers (who trade on it) rather than cheaper subscriptions to more subscribers (who are entertained and enlightened by it). This seems like a hard line to police: The Wall Street Journal, which apparently got this leak before Medley did, also charges for subscriptions. How many subscribers do you need, or how cheap must your subscription be, to qualify as a media organization?
