"Robust Evidence" Confirms Fed Leaks Data Ahead Of Rate Announcements

Tyler Durden's picture

Having questioned whether Tim Geithner leaked every Fed announcement to the banks during his tenure (but did not mention it in his memoirs) and shown that traders acted on information at faster than the speed of light (and thus were indeed aware of leaked decisions ahead of time), it should be no surprise that a new research paper has found “robust evidence” that some traders have been getting early news of U.S. Federal Reserve rate announcements and then trading on it during the Fed’s media lockup. The trading anomalies that Bernile and his colleagues spotted begin about 15 minutes before the news embargo is lifted and continue at a fairly even pace and are "statistically significant and in the direction of the subsequent policy surprise."


As Bloomberg reports,

A research paper has found “robust evidence” that some traders have been getting early news of U.S. Federal Reserve rate announcements and then trading on it during the Fed’s media lockup.


The paper detects abnormally large price movements and imbalances in buy and sell orders that are “statistically significant and in the direction of the subsequent policy surprise.” The moves occurred during the window between when Fed announcements are supplied to the news media and when they are permitted to be released to the public, the authors write.


“Back-of-the-envelope calculations indicate that the aggregate dollar profits … range between $14 [million] and $256 million across the four markets that we examine” between 1997 and 2013, the authors write.

And - just as Nanex had proved previously...

“What is really interesting about our work is that it shows the problem is not a problem of milliseconds,” Bernile.

In other words, this was not just HFT front-running but actual 'information' leakage... from whom we wonder?

As we noted before...

From the August 16, 2007 transcript (page 13 of 37) of the conference call preceding this announcement.


MR. LACKER. If I could just follow up on that, Mr. Chairman.




MR. LACKER. Vice Chairman Geithner, did you say that [the banks] are unaware of what we’re considering or what we might be doing with the discount rate?




MR. LACKER. Vice Chairman Geithner, I spoke with Ken Lewis, President and CEO of Bank of America, this afternoon, and he said that he appreciated what Tim Geithner was arranging by way of changes in the discount facility. So my information is different from that.


CHAIRMAN BERNANKE. Okay. Thank you. Go ahead, Vice Chairman Geithner.


VICE CHAIRMAN GEITHNER. Well, I cannot speak for Ken Lewis, but I think they have sought to see whether they could understand a little more clearly the scope of their rights and our current policy with respect to the window. The only thing I’ve done is to try to help them understand—and I’m sure that’s been true across the System—what the scope of that is because these people generally don’t use the window and they don’t really understand in some sense what it’s about.

At least we now know who the bankers' mole on the FOMC was before, as gratitude for his services, he was promoted to Treasury Secretary of the US. Because if he leaked one, he leaked them all.


It appears the FOMC announcements were the focus of the leaks...

The researchers found no evidence of trading abnormalities during media lockups ahead of the Bureau of Labor Statistics’ release of the monthly employment and inflation reports, or the Bureau of Economic Analysis’ release of the gross domestic product report.

So - are the markets rigged?

Full paper below:

Robust Evidence

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Zirpedge's picture

Signapore Management University is a party school.

Blowback from flight 370?

NotApplicable's picture

Wake me up when Holder issues a warrant for Geithner. Until then...


Buckaroo Banzai's picture

Blue Horseshoe loves Anacott Steel. Apparently.

Four chan's picture

is this a leak?  the real owners of the fed, take positions, give their directive to the fed, then the fed announces the owners position of the day.

we once had a money system designed and fought for by patriots. who designed our system and what tribe owns it?


we must think higher and deeper, because what we have done has enslaved us, so far.

SoilMyselfRotten's picture

They just may be making intelligent, well-thought out directional bets based on their years of market experience and due diligence. Hahahahahahahhaha, my bad, just had to say it out loud to see what it sounded like.

NoDebt's picture

Looking at the "lockup" period will never get you to where the big fix happens.  Those who get the announcement 2-3 days (or longer) in advance, have time to analyze and lean into the market well before announcement day.  

Doesn't anyone else remember the leaking of Government economic statistics (BLS?  BEA?  I forget the agency) to various connected politicians and external private parties DAYS in advance of their formal release?  It was covered on ZH less than a year ago, if memory serves.  It was justified on the grounds that those parties could "harmonize their message" with the forthcoming announcement.  And, of course, NOBODY ever traded on that information.  Surely not.

Wake up, stop looking at the miliseconds and start looking where the big boys play the game.

Barry McBear's picture

I remember the US downgrade in 2011 saw the sell off start the afternoon before.  



MeelionDollerBogus's picture

At this point it's blue-chip, blue horseshoe, blue apple, blue ballz & blue birdie all having a gangbang train on Anacott Steel.

Dr. Engali's picture

Wake me up when there is a warrant out for Holder.

Ignatius's picture

Whatever reservations I may have concerning Armstrong, his prediction of a turn in the Economic Confidence Model at 2015.75 seems more prescient with each passing day.

Canadian Dirtlump's picture

Holder became a made man after the Oklahoma bombing. They peddled the 2 retardedly spoken bowl cut wearing tardhats aka Yellen and White and confirmed that the markets aren't rigged so we're all good.


Truth is, we're all in until is crashes because anyone with eyes to see knows the entire game is rigged and it ends with a war as the system crashes.

BeetleBailey's picture

It'll be Dr. Van Winkle before that happens Doc

Sudden Debt's picture

weird he? You beat up a hobo with a baseball bat and they give you a 50 dollar fine...
and they riig everything with a pricetag and they get a bonus....

JR's picture

You may never need to give up your Z's, NotApplicable. Holder doesn’t do justice; Holder does race, and Holder does politics. He just doesn’t have time to deal with legitimate crime or fraud (aka Geithner). Under Holder Lois Lerner walks free; the Black Panthers get a pass for policing a polling place in Philadelphia with nightsticks in 2008; and it's business as usual for voters in 2008 to be told to “Vote for Obama” from posters plastered in many polling places.

But Holder was able to find time to send “civil rights” agents today to Nebraska’s Republican primary.

Writes Victory Girls: “Eric Holder’s Department of (in)Justice will be monitoring two counties during today’s Nebraska Republican primary—where Tea Party-backed Ben Sasse, former State Treasurer Shane Osborn, and Omaha banker Sid Dinsdale are locked in a three-way race—looking for any hint of civil rights violations. Representatives from the DOJ will be snooping around, looking for voter suppression or voter intimidation, you know, just like it did when No One Was Prosecuted in Pennsylvania following the election of Barack Obama in 2008.”


LawsofPhysics's picture

Fascism/cronyism/oligarchy, call it what it is already.  Prepare.

TeamDepends's picture

The Fed is leaking?!?  Stick your finger in the dyke, citizen!!!!!

666's picture

Who cares? Nobody will be prosecuted and punished...

semperfi's picture

I'm not touching Yellen !

rubiconsolutions's picture

"Stick your finger in the dyke, citizen!!!!!"

Is that another Hillary Clinton joke?

Cognitive Dissonance's picture

It depends on what 'is' 'rigged' is.

Theta_Burn's picture

And the consequences for this criminality will be?

Cognitive Dissonance's picture

More of the same?

A slap on the wrist?

Bigger bonus pools?

Martial law?

Wait, wait, I'm close. I can feel it in my endo. Don't tell me.

MeelionDollerBogus's picture

Punitive bonus adjustments of only +50% rather than +500% ?

slightlyskeptical's picture

This is probably why the SEC lets everyone get away with the criminal behavior...because the Treasury is complicit as well.

pods's picture

The FED works FOR the banks, why the hell wouldn't they let them in on it?


anarcholeptic's picture

What good would that do? Everybody knows they're criminals... Thats like saying we're going to check into the criminality of the FEDs criminal activity.

anarcholeptic's picture

What good would that do? Everybody knows they're criminals... Thats like saying we're going to check into the criminality of the FEDs criminal activity.

mtndds's picture

Fuck ya they are rigged!  Bastards.

101 years and counting's picture

they have it backwards.  the data is leaked TO the fed by the bankers, not the other way.

JustObserving's picture
"Robust Evidence" Confirms Fed Leaks Data

No US academicians would dare make such conclusions - their careers would go up in flames.  Welcome to the land of the free, and rigged markets.

Worry not, brave Americans, the NSA has you covered from every angle.

Let's not forget that German investigators concluded that there was considerable insider trading before 9/11.  Of course, the 9/11 commission refused to look at insider trading in conjunction with 9/11 - it had little practical value they claimed.

German central bank president Ernst Welteke later reports that a study by his bank indicates, "There are ever clearer signs that there were activities on international financial markets that must have been carried out with the necessary expert knowledge," not only in shares of heavily affected industries such as airlines and insurance companies, but also in gold and oil. [Daily Telegraph, 9/23/2001] His researchers have found "almost irrefutable proof of insider trading


Seasmoke's picture

There is never just one cockroach. 

order66's picture


Captive agencies all.

Dewey Cheatum Howe's picture

If you can prove it was one of the FED or Treasury trading desks profiting on it. Yes without a doubt that even a caveman could understand the fact.


OC Sure's picture



"The trend has been established before the news is published, and in bull markets bear items are ignored and bull news exaggerated, and vice versa."  - Livermore

Dr. Engali's picture

I'm sure that this fine report will give our diligent regulators all the information they need to pursue and punish all the culpable parties.... as soon as they get done watching the latest episode of midget trannie porn.

Ban KKiller's picture

You give them too much credit. 

i_call_you_my_base's picture

The idea is to recapitalize banks through fraud.

seek's picture

Which is the polite way of saying the idea is to cover up the first fraud with a second, bigger fraud.

optimator's picture

The markets are all rigged.  You know it, they know it, they know you know it, and they know there isn't a thing you can do about it.

Case Closed.

Winston of Oceania's picture

Then why do the sell side bemoan the lack of HUMAN traders in the market? Without the day traders and 401K monies "all-in" on stawks they have no one to sheeple-shear.

seek's picture

The sell side traders are just in it for the skim and they need victims.

The people behind this make up the system itself. The amounts here are too small to actually be of use to do anything meaningful within the system -- but they are sure as hell a great reward to those who cooperate with TPTB in making things happen.

syntaxterror's picture

Who needed early leaks?

Everyone knew it was going to be: CTRL+ALT+PRINT, ZIRP, bailouts, handouts, with no regulatory enforcement.

Didn't take a nostradamus to figure that out. 

BeetleBailey's picture

OF COURSE the markets are rigged. What a fucked up question to ask on this forum.

Geithner? The little weasel prick needs to be locked up...and butt fucked sans lubrication from the pervs in prison.....

..for like....30 years...

youngman's picture

Just another loss of confidence in the markets....they really are doing a great job of destroying it...and when it falls..the guilty will be easy to find....they are the ones with all the money...

Ban KKiller's picture

Yes, but I am confused to the term "confidence" and anyone who has  it on Wall Street or main street fot that matter! 

I am confident that Wall Street is corrupt. 

Long suicide vests.