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Richmond Fed president Lacker says he was source of Medley leak, resigns

CNBC logo CNBC 4/4/2017 Jeff Cox
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Richmond Federal Reserve President Jeffrey Lacker announced his immediate resignation Tuesday, admitting that he discussed sensitive information with an analyst regarding the Fed's plans for economic stimulus.

Lacker, 61, became president and CEO of the Federal Reserve Bank of Richmond on Aug. 1, 2004. He is a member of the policy-setting Federal Open Market Committee. CNBC has learned that the resignation was negotiated with law enforcement officials.

In his letter of resignation, Lacker admitted to speaking to an analyst at Medley Global Advisors regarding the September 2012 Fed meeting.

Lacker said he was asked by an analyst about an "important nonpublic detail" regarding the Federal Open Market Committee's policy options.

"Due to the highly confidential and sensitive nature of this information, I should have declined to comment and perhaps have ended the phone call," Lacker said. "Instead, I did not refuse or express my inability to comment and the interview continued."

In addition, he said he was obligated to disclose that the analyst had confidential information, which he did not do.

The Fed was criticized for not referring the leak to the Securities and Exchange Commission or the FBI. Instead, Fed General Counsel Scott Alvarez lead a Fed probe into the matter from October 2012 until March of 2013.

Lacker said he further did not disclose during an internal review into the matter that the analyst had confidential information. He never revealed the information until an April 15 interview with multiple federal authorities including the FBI.

"I deeply regret the role I may have played in confirming this confidential information and in its dissemination to Medley's subscribers," Lacker added. "In this episode, as in all of my communications with analysts, journalists and the public, it was never my intention to reveal confidential information."

The Richmond Fed said it was immediately looking for a replacement. In the interim, Mark Mullinix, who was first vice president, will serve as acting president.

"We are focused on moving forward within our organization — and were already underway with our presidential search, following Jeffrey Lacker's announcement in January to retire in 2017," it said in a statement. "This search process will continue as scheduled."

The Medley investigation involves allegations that confidential information from the Federal Reserve Board committee, which sets monetary policy, was leaked to a private newsletter. Such a leak could have given an unfair advantage to some investors.


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