Providing news organizations early access to economic data "unintentionally creates an unfair competitive advantage for certain news organizations and their clients," the audit found. "Their early access to the data positions them to potentially communicate this information to their clients, allowing them to trade on this data faster than the Department can post the information to its website and faster than the general public can access it once the embargo is lifted."

Lockup rules

Now, reporters gather in a secure room at Labor Department headquarters and are given data 30 or more minutes before scheduled release, giving them time to prepare stories and headlines. The news is published when a government employee throws a switch opening communication lines to the news organizations' computer systems, ending the embargo.

Bloomberg, Thomson Reuters Corp. and Dow Jones & Co. are among news organizations that participate in the lockup and release the information to websites and customers, including traders.

A memorandum signed by Eric Seleznow, acting assistant secretary for the Labor Department's Employment and Training Administration, and Bureau of Labor Statistics Commissioner Erica Groshen endorsed the recommendation to examine the procedure.

"We agree with the OIG that it is appropriate to consider ending" the weekly report on unemployment-insurance claims, they said in the memo. "Well before the release of the OIG's report, the Department began exploring the value of the press lock-up for the UI weekly claims report and intends to continue its consideration of how best to disseminate the report to the public and to news organizations." 

Fair release

The Labor Department began conducting press lockups in the mid-1980s, when news organizations used landline telephones to report economic releases. With the advent of computers and high- speed Internet connections and trading methods, the department and other statistical agencies have struggled with ways to fairly release economic data.

The government agency's system isn't flawless. In August 2012, the Labor Department released jobless claims data on its website more than 15 hours prior to the official release time after a test of its automated software system accidentally triggered the posting.

In April last year, the Labor Department outfitted its lockup room with new equipment and changed its rules to guard against possible leaks.

Other agencies have had similar snafus. In April, Citigroup Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. were among at least 15 financial companies that received potentially market-moving Federal Reserve information 19 hours before the public in a release the central bank called a mistake.

Lockups 'better'

In the case of Labor Department lockups, today's audit might address a problem that doesn't need fixing, said Eric Scott Hunsader, chief executive officer of Winnetka, Illinois- based Nanex, a company that analyzes high-frequency trading.

"They seem to do the best job of not allowing it to leak," Hunsader said. "I think what they're doing now is actually better than putting it on the agency servers."

Posting important data, such as the monthly jobs report, to agency websites poses its own risk, he said. Information on agency websites is vulnerable to hacking and high volumes of traffic can overwhelm servers.

If the Labor Department could stream data on its website "so that thousands of computers aren't banging on it a thousand times a second each to gain a few precious milliseconds," that would be a good development, Hunsader said.

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