Analyst Linked to Secret Information Leaked From Within the Fed

Craig Torres at Bloomberg has the details:

Alarms went off inside the Federal Reserve: the Fed’s innermost secrets had leaked to Wall Street.

Confidential deliberations of the Federal Open Market Committee made their way into a research note circulated among traders.

The report -- a fly-on-the-wall account of the FOMC’s September 2012 meeting, with hints of Fed action to come that December -- prompted a mole hunt that reached the highest levels of the central bank.

The story of the FOMC leak underscores the lengths to which outsiders will go to penetrate the inner workings of the Fed, and how valuable access can be. The Fed has never disclosed the investigation or its findings...

The 2012 report on the FOMC came from Medley Global Advisors, a member of Washington’s policy intelligence community...

Medley issued its FOMC report on Oct. 3, 2012, one day before the Fed released its minutes. People who received the Medley report could have positioned to profit from a decline in U.S. Treasury security prices that followed the Fed’s official release...

The Oct. 3 report was written by Regina Schleiger, a former financial journalist who is now a senior managing director at Medley...

The September meeting was a half step toward what would become one of the most aggressive moves in U.S. monetary history. The world got a hint of what was coming that December when the FOMC minutes were released on Oct. 4.

Medley clients got an early peek.

“The minutes of September’s meeting will show, however, that the groundwork for further action in coming months has been laid, and that labor market improvement is unlikely to be substantial enough to stave off new Treasury purchases into 2013,” Schleiger wrote in her Oct. 3 note.

Alarming Report

Schleiger’s “special report,” titled “Fed: December Bound,” was so detailed that it alarmed Fed officials...

Bernanke also asked the pair to look into sources behind a Sept. 28, 2012, article in the Wall Street Journal. The reporter, Jon Hilsenrath, had described internal documents the FOMC had used in making its decision on Sept. 13, though in less detail than Schleiger.

Prior to joining Medely,  Schleiger worked as a reporter for Knight-Ridder Financial News and Bridge News.

Medley was founded in 1997 by Richard Medley, former chief political strategist for George Soros. Medley left the firm in 2005 and died in 2011 at age 60.