SEC launched extensive probe to identify sources in Reuters stories

A US Securities and Exchange Commission watchdog conducted an extensive, months-long investigation to find out who had leaked information that appeared in two Reuters stories published last autumn, but it was unable to identify the sources, according to a report of the probe seen by Reuters on Thursday.

The SEC's Office of Inspector General (OIG) started the investigation after Reuters published information about the regulator's decision, taken in a closed-door meeting on September 12, 2013, to settle its probe into JPMorgan Chase & Co’s massive London Whale trading loss.

The investigation started after Reuters reported on Sep 17, 2013 that the regulator had approved its portion of a $700 million civil settlement with JPMorgan in a split vote. The story also said that two of the five commissioners had recused themselves from the decision.

The SEC made its decision public on Sep 19, 2013. About a week later, Reuters reported further non-public details about why one of the commissioners, Michael Piwowar, had voted against the settlement.

In its report, dated March 5, the watchdog said it interviewed as many as 53 SEC employees, including Chair Mary Jo White, SEC commissioners and other top officials, during the investigation.

An OIG official said its inspectors don’t consider issues of press freedom when carrying out their investigations, and that the probe was launched at White's request. "Our office doesn't really differentiate where the information went," said Raphael Kozolchyk, the watchdog’s legislative and public affairs counsel.

The SEC declined to comment on the OIG's probe and report. CNBC earlier reported on its contents.

Piwowar raised concerns about the leaked information with White, according to the OIG report. White and Piwowar could not immediately be reached for comment.

Reuters Editor-in-Chief Stephen Adler said: "It's the job of journalists to report vigorously on the workings of government, and to provide readers with news that some may prefer to keep secret. It is in that spirit that Reuters covers the SEC and other agencies of the US government, and we plan to continue to do so while protecting the confidentiality of our sources."

The investigation is the latest example of the Obama administration's aggressive moves to try to plug leaks of non-public information to the media. Last year, the Justice Department was criticised for examining reporter emails and phone records without first notifying the press outlets. Attorney General Eric Holder later met with news media executives and agreed to revise policies for dealing with the press in national security cases.

Besides the interviews with SEC staff, the OIG reviewed email records of 39 employees, obtained the attendance roster for the closed-door meeting and manually reviewed employees’ telephone records.

It also obtained building access logs for September and October to find out when four Reuters reporters had visited the agency's headquarters. The OIG sought to interview the reporters involved in the two stories, but they declined its request.

Kozolchyk said the OIG does not disclose the costs of individual investigations, but that the watchdog did not hire any extra staff or outside investigators for the probe.

One advocate for government transparency and press freedom said officials should be allowed to guard some secrets, such as those regarding national security and sensitive information about publicly traded companies. That includes the details of secret meetings by SEC commissioners, said Michael Smallberg, an investigator for the Project On Government Oversight, a watchdog group.

"I don't see anything egregiously wrong with this investigation," he said.

However, a report last year by the Committee to Protect Journalists, a New-York based advocacy group for journalists, criticized the Obama administration for prosecuting media leaks, excessive use of classified documents and increased government surveillance of reporters and their sources.