Feds Wring Their Hands Over Bond Talk

The revelation that a consultant tipped off his clients a half-hour early on the 30-year bond's demise has raised the government's hackles. But that merely puts the feds in the same boat as many traders, who already were angry about the events of Oct. 31.

In a terse statement released Tuesday, the Securities and Exchange Commission said that it had "initiated an investigation" into the day's events and that it would "vigorously pursue" the matter. That some people may have gotten a head start on the second-biggest rally in the long bond's history doesn't exactly seem fair, to the government's way of thinking.

But the SEC has its work cut out for it. For one thing, breaking the Treasury's news embargo may not even warrant any penalties, because news embargoes are informal. The consultant in question, Pete Davis, has said that he has attended government media briefings for years.

More troubling is the government's own role in the snafu. The Treasury briefing began at 9 a.m. EDT; the contents were embargoed to the news media until 10, meaning that reporters were free to work on stories as long as they didn't publish before the Treasury made its public announcement. Davis began making his calls after the briefing concluded at around 9:30. ...