Under normal circumstances, this story would provoke outrage and demand for action.  After an avalanche of revelations about how the government spies on Americans, this turnabout story might just be the feel-good post of the day.  The Wall Street Journal reports that the FBI suspects traders may be spying on government agencies to get sneak peeks at economic indicator reports in order to gain an edge on the markets, especially on the monthly jobs reports:

The Federal Bureau of Investigation has discovered vulnerabilities in the government’s system for preventing market-moving economic reports from leaking to traders before public release.

Law-enforcement officials found “a number of operational vulnerabilities” involving “black boxes” used by several departments to control the release of sensitive economic data such as the monthly unemployment rate, according to a report by the inspector general at the Commerce Department.

The report said it was possible to subvert the system, which was designed to prevent media companies from sending economic data to traders early.

Actually, it’s not a feel-good story at all.  The information comes directly to traders connected to government systems through the black boxes, which are designed to give everyone the same data at the same time.  Those with advance knowledge of the numbers can make trades on the data before their public release affects price, which means that unwitting partners in those transactions lose real value in the trade by either buying too high or selling too low.

Originally, the probe focused on Bloomberg, but the media organization found the flaw and reported it independently without using it.  The FBI cleared Bloomberg last fall, but that still leaves open the issue of the suspicious trading. It also leaves open the question of the design of the security system itself.

The probe discovered that the boxes were not that difficult to defeat.  Simply pulling the plug on it worked, as did more sophisticated end runs around the box, such as moving the cable or installing a wireless device to the cable before it hit the box, presumably preventing the connection of insider access to a particular reporter.  The FBI warned in its May report that some of those concealed devices may still be in the lock-up rooms.  None of this sounds exactly like a robust security environment, and the wonder may be why more people weren’t getting around the boxes than there are now.