That’s what New York attorney general Eric Schneiderman called a recently discontinued practice by the U-M’s Institute for Social Research. For the last five years, Thomson Reuters Corporation paid the ISR up to $1.2 million annually for the right to distribute the results of the institute’s monthly consumer confidence survey. Thomson Reuters then gave its clients key numbers from the survey five minutes before the ISR posted them on its website. An elite group got an even more valuable head start: they paid Thomson Reuters up to $6,000 a month to get the results in digital form two seconds before anyone else.
The confidence survey is watched intently as an indicator of where the economy is headed, and stock prices often rise or fall when it’s released. Computers now execute trades so quickly that those two seconds gave high-speed traders plenty of time to anticipate–and profit from–those moves.
An ISR employee who spoke to the Observer under condition of anonymity described the deal as “almost a point of pride,” recalling a project manager who referred to it as an indicator of “how influential and important” the study was. But in 2012, Bloomberg News strongly criticized the arrangement in a letter to then U-M president Mary Sue Coleman. The following year, the Wall Street Journal ran a front-page story about Thomson Reuters’ early release of the results, and Schneiderman announced an investigation.
University spokesperson Rick Fitzgerald says “there was no official action taken regarding the early release,” but, under pressure from Schneiderman, Thomson Reuters agreed to suspend the two-second head start. Its five-year contract expired at the end of last year, and the new bid was won by Bloomberg News’ parent company, Bloomberg L.P. Fitzgerald says Bloomberg is paying $2 million a year to distribute the survey results–which now go out to everyone at once.