Regulators Examining Sales of Early Financial Data

The financial industry is bracing for new scrutiny of services that give trading firms an advance look at market-moving data and news.

The New York attorney general’s office has been taking a broad look at the common practice. On July 8, one prominent data provider, Thomson Reuters, under pressure from the attorney general, announced that it was suspending an early release of a consumer confidence survey to clients who paid extra. Financial products that give traders first access to data have become widely accepted within the industry. Dow Jones recently announced the creation of DJ Dominant, a program that will release news articles two minutes early to subscribers who pay more. The nation’s stock exchanges, meanwhile, are often releasing new premium products that offer faster delivery of public data from the exchanges. For the most part, federal securities regulators have been comfortable with these arrangements. But the New York attorney general, Eric T. Schneiderman, is potentially in a position to throw them into question. The attorney general has broad powers to crack down on Wall Street because of the Martin Act, a 1921 New York law that allows him to bring fraud cases against a company without proving the company’s intent.