I’ve been watching Billions, the HBO show about hedge-fund managers who trade off inside information, prosecutors who build their cases unethically and reporters who make “contracts” with both sides — all in the name of the public good.
Billions is art imitating life; it’s pure fiction, but informed by the observations of Andrew Ross Sorkin, the New York Times business columnist known for his access to Wall Street’s most powerful, who co-created the series.
Ubiquitous on the set of Billions are Bloomberg terminals, the data-crunching machines that made Michael Bloomberg one of the world’s richest individuals. “The terminal” is also in the background of some real-life drama in Ottawa at the moment. The intrigue won’t ever inspire a television script, but it’s worth watching to see whether Prime Minister Justin Trudeau’s government truly cares about the integrity of public information.
It all relates to the leak of Statistics Canada’s latest Labour Force Survey on May 8, with April employment figures showing up on Bloomberg screens about a half-hour before their scheduled release to the public. The journalism arm of New York-based Bloomberg LP had pulled off a scoop like I’ve never seen in more than two decades in this business.
The Ottawa bureau of Bloomberg News managed to liberate the hiring stats from the relatively small group of officials, politicians and staffers privy to the data in advance of their official release at 8:30 a.m. Bloomberg attributed the information to a “person familiar,” suggesting the information was relayed and that it didn’t actually possess a hard copy of Statistics Canada’s report.
Two days later, Finance Minister Bill Morneau and Navdeep Bains, industry minister, told reporters they were determined to find out how that happened. “We will be leaving no stone unturned,” Morneau said.
“It’s completely unacceptable what happened,” added Bains, who oversees Statistics Canada. “We are looking into the matter and will make sure going forward we have the appropriate provisions in place to make sure that this does not happen again.”
Leaks happen all the time in government towns. This one was unusual because it violated the principle that public information that could be used to turn a quick profit should be available to everyone at exactly the same time.
On May 8, clients of Bloomberg Professional Services (the terminal) and Bloomberg News subscribers got a jump on everyone else. They make up a privileged group. A subscription to bloomberg.com costs about $55 per month, depending on the exchange rate. A terminal rental is something else entirely: it goes for about US$2,000 per month and there are some 325,000 subscribers.
My allusion to Billions wasn’t a flourish: by leaking the numbers to Bloomberg, the source ensured they would be seen first by people who know exactly what to do with them.
“A premature release of data (if that is what happened) needs to be investigated and explained,” tweeted Paul Boothe, a former deputy minister at both Finance and Industry. “This is potentially market-moving info that confers an advantage to anyone who has it. It strikes at the heart of the integrity of our professional public service.”
Even some Bay Streeters were upset.
“While the tragic job loss is the main focus, a major security breach occurred, and some may have profited from it,” Derek Holt, an economist at Bank of Nova Scotia, said in a note to his clients. “There must be an official investigation into a serious leak that tarnishes the reputation of Canadian markets and the circumstances surrounding Bloomberg’s decision to report the leak.”
Perhaps Bloomberg could have been content sitting on its tip — and perhaps a hungry tiger would be satisfied licking your fingers instead of biting off your arm. Bloomberg did what news companies do. In 1989, Global Television’s Doug Small obtained details of the federal budget and reported them on air. He was arrested, but the charges were later dropped. No one from Bloomberg will be going to jail over this.
Might someone else? It can’t be ruled out. A person with early access to the numbers could have seen a money-making opportunity, especially since the headline number was considerably better than the forecasts that traders had been using to price financial assets. Taking advantage of that arbitrage opportunity would have been as easy as calling an acquaintance on a trading desk in Europe or North America and suggesting they keep their eyes peeled for some surprising Bloomberg headlines out of Canada.
The Canadian dollar appreciated after Bloomberg published its story, but not dramatically so. Still, it’s not a good look for a country that sees itself as a leading economy and a moderately important financial centre. Last week, after the leak, Canada was being compared to Argentina, a country on the brink of its ninth default and a history of faking inflation numbers.
Such comparisons are exaggerations, but in the service of a point: Canada is now on at least its second consecutive government that has had no issue with politicizing data, whether it be Stephen Harper’s attack on the long-form census, or the Trudeau government’s indiscriminate sprinkling of market-sensitive jobless claims data earlier in the COVID-19 crisis.
Statistics Canada now appears cowed. First thing on the morning of May 11, I asked for confirmation of who receives the jobs data in advance. The agency finally responded in an email that arrived at 5:52 p.m. eastern time on May 12. The list, all with approval of the clerk of the privy council: Finance; the Privy Council Office; Employment and Social Development Canada; Innovation, Science and Economic Development Canada (Industry); and the Bank of Canada.
For what purpose? With the possible exception of the central bank, message preparation, of course — so not for any real purpose at all. If Bains is serious about preventing future leaks, he will make the politicos wait until the official release like the rest of us.
For now, Statistics Canada is making the decision for him. “Pre-releasee information is provided under strict conditions and through secure channels,” the agency said in a statement. “There will be no pre-release of the (Labour Force Survey) information until further notice.”