Facing Probe, Thomson Reuters Won't Release Survey Early To Hedge Funds

Jul 8 2013 | 10:19am ET

Hedge funds will have to do without an early peek at a crucial consumer-confidence survey, at least for now.

Thomson Reuters said yesterday it would temporarily suspend a service that gives its top-paying subscribers—notably hedge funds and high-frequency traders—notice of the University of Michigan survey two seconds before its wider release. Those customers pay $6,025 a month for the advance look.

Thomson Reuters agreed to end the practice for now after New York Attorney General Eric Schneiderman opened a probe into it. The company said it is "fully cooperating" with the investigation but believes it has the right to "legally distribute non-governmental data and exclusive news through services provided to fee-paying subscribers." Thomson Reuters pays $1.1 million a year for the exclusive right to distribute the Michigan survey, an agreement that specifically allows the two-second early release.

For its part, Michigan says it needs Thomson Reuters' money to pay for the survey, which is widely watched by market players.

The survey's importance is the source of New York's concern. The attorney general's office began looking into whether the practice violates the state's securities laws after a whistleblower complaint from a former Thomson Reuters employee, who is suing the company for wrongful termination.

According to The Wall Street Journal, some seven million shares of 1,624 separate securities were shorted in within a second of the March 15 survey release, and more than 85% of those securities lost ground within five minutes of the release.


In Depth

Dillon Eustace: The Advantages of ICAVs

Feb 11 2016 | 7:51pm ET

As the growth of alternative investment vehicles continues, global asset managers...

Lifestyle

Citadel's Ken Griffin Donates $40M To New York's Museum of Modern Art

Dec 22 2015 | 9:23pm ET

Citadel founder Ken Griffin has donated $40 million to New York’s Museum of Modern...

Guest Contributor

Hedging Against Reputational Risk in the 21st Century

Feb 12 2016 | 7:18pm ET

For investors, the first step in researching a new fund or manager is to google...