University of Michigan Inks Deal to End Early Release of Survey

October 14, 2014

By Brody Mullins via WSJ

Investors will no longer be able to get a sneak peek at the University of Michigan’s consumer-confidence survey after the school agreed to allow Bloomberg LP to distribute the economic indicator starting next year.

Under the terms of the five-year contract, the university’s consumer-confidence survey will be distributed each month by Bloomberg to its clients through a news story about the survey results. At the same time, the university will release the survey’s findings on its website.

Bloomberg, which will take over distribution of the consumer-confidence survey from Thomson Reuters Corp. TRI.T -0.80% in January 2015, said it would end the practice of charging investors a fee in exchange for an advanced copy of the survey.

“This agreement ensures that we will be able to maintain the high quality of these surveys for the foreseeable future, and supports our strong commitment to open access to research data,” said James Jackson, the director of the university’s Institute for Social Research, which produces the monthly survey.

The new arrangement comes after a Page One article in The Wall Street Journal last year described how the University of Michigan and several other entities that produce market-moving surveys often sell an early look at the results to investors.

Under the previous contract, Thomson Reuters paid more than $1 million a year to be the exclusive distributor of the University of Michigan’s survey results. Reuters charged investors more than $5,000 a month to get the results before they were made more broadly available.

The practice is legal under U.S. securities rules, but nonetheless caught the eye of regulators, who said it was unfair to regular investors. New York’s attorney general started an investigation, prompting Reuters to say it would temporarily suspend the sneak peeks. The university’s new contract with Bloomberg marks an end to the practice.

“By ending early access to critical market-moving survey data information, this deal strikes a major blow in our effort to promote fairness and avoid unfair distortions in the securities markets by cracking down on what I call ‘Insider Trading 2.0,’ ” said Eric Schneiderman, the New York attorney general who investigated the practice.

Under the Thomson Reuters deal, subscribers who paid a fee would receive a high-speed feed at 9:54:58 a.m. Eastern time. Those who pay for Thomson Reuters’s regular news services get the report two seconds later. At that point, it swiftly becomes widely available through other news providers as well, including through Dow Jones Newswires, a unit of Wall Street Journal publisher News Corp, which is a Thomson Reuters competitor. Five minutes later, at 10 a.m. Eastern time, the university posts the numbers on its website.

The University of Michigan’s consumer-sentiment survey, produced since 1946, is considered by some economists to be a predictor of future U.S. household spending and is closely watched by financial markets.

Photo: Lili Vieira de Carvalho