Tags: FBI | financial | black | box

FBI Finds Weaknesses in Protection of Sensitive Market Data

Tuesday, 06 Aug 2013 11:11 AM

By Melanie Batley

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The FBI has found weaknesses in the government's system of ensuring the confidentiality of market-moving economic reports before they are made public.

According to an inspector general's report, law enforcement officials have identified "a number of operational vulnerabilities" involving "black boxes" used by the Commerce Department and other agencies to prevent the early release of sensitive or embargoed economic data to traders, the Wall Street Journal reported Tuesday.

The government's system of releasing information under embargo relies on a system of black boxes. Financial-media firms must connect their computers to the boxes to access the information when embargoes are lifted.

The FBI has long been concerned about trading activity that seemed to spike just before the release of sensitive economic data, and agents have spent years trying to identify weaknesses in the process that would enable misconduct.

While the report did not say whether the agency knows of any specific instances in which the system was knowingly exploited, it flagged a number of technical flaws, such as different ways the black boxes can be bypassed, the Journal reported.

In one instance, Bloomberg L.P. alerted the FBI that it had found during its own testing of computers it installed at the Commerce Department that there were ways to get around the black boxes.  An investigation of the Bloomberg tests revealed "no evidence of an intentional violation" of the law by Bloomberg or its reporters at the time, the Journal reported.


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