Fed concerned about suspicious gold trading

WASHINGTON The Federal Reserve is concerned about suspiciously heavy trading of gold futures after its meeting last week that may have been triggered by a premature release of market-sensitive information.

In a statement, the central bank said Tuesday that news organizations that receive embargoed information from the Fed agree to withhold information until the time set for its release. The Fed statement said, "We will be conducting follow-up conversations with news organizations to ensure our procedures are completely understood."

After the meeting, the Fed said it would hold off on slowing its $85-billion-a-month in bond purchases. That surprised markets and led to a day of record highs on Wall Street.

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Trading in financial markets is now dominated by automated computer systems, which make trades in tiny fractions of a second that can lead to millions of dollars in profit. Receiving the data early - even by a few milliseconds - can give an unfair advantage to some firms.

The security of sensitive, market-moving information has become a concern for federal officials. Possible leaks of government data have already led the Labor Department to tighten its procedures for distributing information early to reporters, including the closely monitored monthly employment report.

Labor also revoked early access for some media organizations.

The Fed also operates media lock-ups when its policymaking committee meets eight times a year, although the procedures are less strict than at Labor and the Commerce Department.

Labor and Commerce officials hold lockups in secure facilities and control the Internet and phone lines. When lockup begins, the connection is shut off for 30 to 60 minutes and reporters receive the embargoed information. Officials turn phone and Internet lines back on when the lockup ends.

Reporters are prohibited from bringing cellphones into the lockups. Labor is even more strict. It recently installed lockers outside the room where reporters must stow all personal items - including their pens and calculators.

Fed officials work on an honor system. The Fed's policy statement is distributed 10 minutes early to reporters at their desks in the press room at Treasury. Internet and phone lines are not disconnected, and cellphones are not collected. The Fed has similar procedures for a separate lockup held at its headquarters.