U.S. regulators are digging into a topic that has been the talk of Wall Street and Washington ever since a controversial Vanity Fair article suggested investors made billions of dollars trading ahead of market-moving news: Are government leaks fueling big profits in the futures market?

For months, the Commodity Futures Trading Commission has been quietly ramping up efforts to hunt for suspicious transactions by using technology to pore through reams of market data, said three people familiar with the matter who asked not to be named because the examination isn’t public. The goal is to assess whether some traders are getting a heads up before the release of key economic statistics or federal agencies’ policy announcements.

The CFTC began the push well before the Vanity Fair story ran in October. Upon reviewing the trades highlighted in the piece, the agency was unconvinced and couldn’t substantiate its insinuations of wrongdoing, said two of the people. The Securities and Exchange Commission reached a similar conclusion, one of the people said.

Still, watchdogs acknowledge that the article spotlighted an issue that risks undermining investor confidence: The futures market hasn’t been policed for insider trading nearly as much as the stock market has.

In theory, that could make the derivatives ideal for traders to take advantage of illicit tips that precede big moves for currencies, oil prices or even broad equity indexes. And news out of Washington, including reports on monthly job growth and President Donald Trump’s tweets, is known to trigger some of the wildest swings in futures markets.

CFTC and SEC officials declined to comment on the Vanity Fair article. But CFTC Enforcement Director Jamie McDonald was adamant that regulators have stepped up their data-crunching to boost market surveillance.

“The early returns on our investments in data analytics have been positive,” he said in a statement. “We expect the longer-term impact of our efforts to be even more substantial, as we continue to prioritize detecting and prosecuting misconduct that can undermine the integrity of our markets, like the various forms of insider trading prohibited in the derivatives and commodities markets.”

‘Trading Places’
Concern that futures traders might be profiting from inside information prompted lawmakers to include a provision known as the Eddie Murphy rule in the 2010 Dodd-Frank Act. The regulation for the first time made it illegal for investors to engage in the type of scheme depicted in the famed 1980s movie “Trading Places,” in which characters played by Murphy and Dan Aykroyd used a leaked government crop report to make millions betting on orange juice futures.

“There’s much more behavior that is prohibited under the new law,” said Geoffrey Aronow, a law partner at Sidley Austin and former head of enforcement at the CFTC. “The new law is a bigger hammer for the CFTC to bring insider trading cases. It’s an incredibly broad provision.”

Yet in the decade since Congress approved Dodd-Frank, there’s little evidence that the CFTC has made much use of the Eddie Murphy rule beyond a smattering of cases. For example, the CFTC accused a broker last year of sharing customers’ confidential investments in energy contracts with a friend and using the friend’s account to make trades.

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