Ex-New York Fed Official Investigated for Data Leaks
A former director of the Federal Reserve Bank of New York is being investigated by the Justice Department for allegedly leaking inside information on the Fed's discount rate, authorities said today.</br></br>Robert A. Rough, who also is president of the New Jersey Bankers Association, could be prosecuted on insider-trading charges or for wire fraud if investigators determine he leaked the data, Assistant U.S. Attorney Paul A. Weissman said.</br></br>The discount rate is the interest the Fed charges on loans to financial institutions and is regarded widely as an indicator of the direction in which the Fed is seeking to push interest rates. The rate is set by a vote of the Fed's Board of Governors, based on requests from the nation's 12 Federal Reserve Banks. Information about the Fed's strategy could be used to make investments in government bonds and other interest-sensitive securities.</br></br>New York Fed spokesman Richard Hoenig said the bank and the Justice Department are investigating Rough's alleged release of the information to the owners of Bevill, Bresler & Schulman Inc., a defunct government bond dealer.</br></br>The firm gave him a loan, apparently in exchange for the information, according to testimony in the criminal trial of Gilbert Schulman, the former president of the failed firm.