Canada Data Probe Should Look For Trading Linked to Leaks, NDP Leader Says

Opposition lawmakers are asking that an external probe commissioned by the Canadian government into early data releases by Statistics Canada examine whether anyone profited from the practice.

Canada announced Dec. 17 it hired KPMG LLP, the global accounting and professional services firm, to conduct an investigation of the early release of economic data, in a bid to protect the statistics agency’s credibility. KPMG will complete its investigation by March 31, according to a statement published on the agency’s website.

The probe should uncover why “a select few were given privileged access in the past,” said Thomas Mulcair, who is deputy leader and spokesman for economic and financial issues for the New Democratic Party, in an e-mail. That should help KPMG answer the “most sensitive” question, Mulcair said, “did that prior access allow those with such knowledge to make successful speculative trades?”

Industry Minister Tony Clement, who is responsible for Statistics Canada, ordered the investigation after the federal agency, Canada’s primary source of economic information, said it had allowed distributors to get information as much as “59 seconds” ahead of the official release. The agency stopped the practice on Nov. 25 after being alerted to it by Bloomberg News.

The main opposition Liberal party supports the review, Marc Garneau, the Liberal spokesman for industry, said in an e-mail. The review should see “whether the advance notice of up to 59 seconds gave anyone an unfair advantage,” Garneau said.

Protect Credibility

Chisholm Pothier, a spokesman for Finance Minister Jim Flaherty, referred all questions on the issue to the industry ministry. Flaherty is in Kananaskis, Alberta, for a meeting today with his provincial and territorial counterparts.

There is no evidence so far that anyone profited from Statistics Canada’s early releases, Clement told reporters Dec. 16 in Ottawa. The agency must resolve questions about the disclosures to protect its credibility, he said.

In its statement, Statistics Canada said it is “committed to ensuring that the information the agency delivers is timely, relevant and made available to the public with consistency and transparency.”

The agency has a policy of providing equal access to all users. It conducted investigations last year into reports that some data may have been leaked, without finding anything wrong.

Statistics Canada has agreements with 10 distributors, including Bloomberg LP, the parent of Bloomberg News, which are licensed to disseminate its data.

Three Distributors

In a Dec. 3 statement to Bloomberg, the agency said that following a “preliminary examination” of access logs from November it had found three distributors, including Bloomberg, had access to the data before the release time. The agency didn’t say for how long the practice had been going on and has declined to provide the names of the other two distributors, citing agency policy.

The revelations prompted opposition lawmakers, including Liberal Party Leader Michael Ignatieff, to call for a review.

In addition to a probe of the early releases, KPMG will also do a “general review” of the federal agency’s data release procedures, according to the Dec. 17 statement.

“It’s classic for a government to seek to concentrate on recommendations for the future, thus avoiding too close a look at its own choices in the past,” Mulcair said.

Investors use Statistics Canada data to trade bonds, stocks and the currency, as well as to place bets on the path of monetary policy. The Canadian dollar is the world’s seventh- most-traded currency, according to an April 2010 survey by the Bank for International Settlements, with daily turnover on trades against the U.S. dollar averaging $182 billion.

The agency’s 10 paying distributors are Bloomberg, the Conference Board of Canada, EcoWin AB, Emerging Markets Economic Data Ltd., FactSet Research Systems Inc., Global Insight (Canada) Inc., Haver Analytics, Moody’s Economy.com, Nomura Research Institute Ltd. and Thomson Financial Investment Management Group, according to Statistics Canada’s website.

To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net; Alexandre Deslongchamps in Ottawa at adeslongcham@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net; David Scanlan at dscanlan@bloomberg.net.

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