News Organizations Ask U.S. to Reconsider Data-Lockup Changes
News Organizations Ask U.S. to Reconsider Data-Lockup Changes
(Bloomberg) -- Attorneys for Bloomberg News and four other media organizations asked the U.S. Department of Labor to withdraw its plan to restrict journalists’ early access to major economic reports, saying the ban on using computers would benefit high-frequency traders and violate First Amendment press protections.
The plan “is very likely to have the opposite of the intended effect and have a material negative effect on the public in the form of less timely reporting and analysis,” according to the letter Tuesday from attorneys Christine Walz and Jennifer Mansfield of the firm Holland & Knight. “It could materially increase the risk of market disruption through misinformation and would favor those in the market who would rather not see information disseminated as fast as possible to the largest number of interested consumers.”
The Labor Department said Jan. 16 it will ban computers from the room where journalists receive advance access to major economic reports such as employment and inflation figures, in an effort to ensure a level playing field. The changes are set to take effect March 1.
Currently, the department hosts “lockups” in Washington for major reports lasting 30 to 60 minutes, where journalists receive the data in a secure room, write stories on computers disconnected from the internet, and transmit them when connections are restored at the release time. Other electronic devices such as smartphones were already prohibited.
The media organizations, also including the Associated Press, Dow Jones & Co., Market News and Reuters, wrote to Bureau of Labor Statistics Commissioner William Beach that banning computers would merely delay news organizations from filing their news stories. That would give an edge to sophisticated traders who could scrape government websites, find the relevant numbers in fractions of a second and execute trades before the data are shared with the public, according to the letter.
“Thus, the changes will have little, if any, effect on the perceived advantage to algorithmic traders,” the letter said. “Instead, it will increase the advantage that algorithmic traders have by impeding Lockup attendees’ ability to disseminate their analyses of the data.”
Beach had cited a 2014 report by the department’s inspector general saying several news organizations that participate are able to profit by providing the numbers to algorithmic traders in a format that provides them an advantage.
The media organizations on Tuesday said the Labor Department failed to give public notice and get comments on the plan as required by the Administrative Procedure Act. Because the plan is intended to make it more difficult to publish stories after the reports are released, the changes “would result in an unconstitutional limitation on the media’s First Amendment protected right to newsgathering and dissemination.”
Chaos could well result from the delays of media filing stories, as Americans swamp government websites to get the reports first, the attorneys said, citing the failure of Department of Agriculture internet sites during the release of market-sensitive reports.
To contact the reporter on this story: Steve Matthews in Atlanta at smatthews@bloomberg.net
To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Alister Bull
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