Tags: FBI | Commerce | data | black box

WSJ: FBI Finds Black Boxes That Control Government Data Are 'Vulnerable'

By    |   Tuesday, 06 August 2013 10:41 AM

The Federal Bureau of Investigation has discovered "a number of operational vulnerabilities" involving "black boxes" that government agencies use to control the release of sensitive economic data, The Wall Street Journal reports.

Government agencies use black boxes to control data flow, aiming to prevent media companies from leaking information, such as employment reports, to traders before the official release time.

The Journal compares a black box to a trap door, explaining that media companies plug their computers into the black boxes. When the embargo on a market-sensitive report is lifted, everyone is supposed to get all the data at the same time.

Editor’s Note:
Forbes Columnist: ‘Who the Hell Cleared This?’ (See Shocking Video)

But last year, Bloomberg discovered it is very possible to access the information early.

According to The Journal, Bloomberg installed new devices in the Commerce Department to allow its subscribers to get data faster. Doing so revealed that there are ways of getting around the black box. Instead of using the devices to its advantage, Bloomberg reported the problem.

Then, the FBI conducted a "consensual seizure" of the computers. It's findings confirmed Bloomberg's concerns, The Journal notes.

Instead of accessing data through the box, a media company could use a phone line or cable to go around the box and tap directly into the computer that delivers the economic data. A concealed wireless device could also route data around the black box. Furthermore, media companies could simply turn the black boxes off, the FBI warns.

The FBI's testing revealed these methods could "adversely impact the timed release of sensitive economic data," but The Journal states the report did not cite any instances where companies had exploited the system's weaknesses.

Still, the issue raises major concerns for authorities who are now paying closer attention to suspicious trading activities before the release of some sensitive data.

One such brow-raising event occurred Monday. Approximately 90 milliseconds before the Institute for Supply Management reported expansion among the nation's service sector, there was a notable drop in gold prices, according to MarketWatch.

In this fraction of a moment, the price of gold for December delivery declined by nearly $2. Prices for shares of world's largest gold exchange-traded fund took a similar dive. After the release of the report, gold was down $8 per ounce.

"Dollar-wise it was a pretty significant move," Eric Hunsader, director at Nanex, a real-time data provider, tells MarketWatch.

Events such as this only aggravate retail investors, who are growing increasingly frustrated with high-frequency trading, deeming the practice unfair. Similarly, regulators are concerned about the possibility of high-speed trading firms paying large fees for early access to market-moving data.

In light of this report, increased vigilance about the black box system seems warranted. Though abuse was not reported does not mean it isn't happening.

"Concealed IT devices may still be in use" in lockup rooms across the government, The Journal says the FBI's investigative report warns.

Editor’s Note: Forbes Columnist: ‘Who the Hell Cleared This?’ (See Shocking Video)

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
Economy
The Federal Bureau of Investigation has discovered "a number of operational vulnerabilities" involving "black boxes" that government agencies use to control the release of sensitive economic data, The Wall Street Journal reports.
FBI,Commerce,data,black box
500
2013-41-06
Tuesday, 06 August 2013 10:41 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved