CHICAGO — For $4,650 a year, the University of Michigan will tip you to a number that moves stock and bond markets.
That's what the university charges J.P. Morgan Chase & Co., UBS and 100 other firms to listen to a conference call as it discloses its consumer-confidence index every month.
The University of Michigan's consumer index is the only U.S. economic indicator that's sold to insiders before the public sees it. The tax-supported state university first sells the survey to those it calls sponsors -- brokerages or companies that can turn their advantage into a quick profit.
"These numbers move markets, and only some people have access to them," said Mercer Bullard, a former assistant chief counsel at the Securities and Exchange Commission. "This is a serious regulatory issue that undermines confidence in markets."
In October, when the Michigan index fell more than traders expected, the price on the benchmark 10-year Treasury note jumped. A trader on the conference call who immediately bought $10 million in Treasuries, then sold as others reacted to the news, would have profited by more than $20,000.
A survey released Friday showed that confidence rose in December to the highest level in four months. The preliminary sentiment index rose to 87 from 84.2 in November. That suggested the economy may accelerate next year, and the benchmark 10-year Treasury note fell more than a quarter of a point, or $2.50 per $1,000 face amount, pushing its yield up about 4 percentage points to 4.06%.
The University of Michigan is "selling information so that traders with a bigger pocketbook can take advantage of smaller traders," said Robert Shiller, a Yale University professor and economist. "It's not the kind of business that the ideal of the university suggests."
The Federal Reserve, the Conference Board and more than a dozen federal and nonprofit organizations release market-sensitive news without charging for it. Unlike the University of Michigan, all take steps to avoid selective disclosure.
The Federal Reserve Bank of New York posts money-supply data under an embargo in a secure area on its Web site. The Fed gives the news media half an hour to digest the news before its scheduled release at 4:30 p.m. New York time on Thursdays.
"We don't favor one group of investors or one audience over any other," said Peter Bakstansky, the Fed's spokesman in New York. "The first principles are principles of fairness."
The Conference Board, a private business group, publishes its own confidence index on the last Tuesday of the month. The media are given access to the information 30 minutes before its release at 10 a.m. EST, said Randall Poe, the nonprofit group's communications director.
"To release it instantly would be to give preference to whoever got it first," he said. "It would be unfair. We operate under the principle of trying to create an even playing field."
The Institute for Supply Management, a nonprofit trade group for purchasing managers, issues a survey on business conditions through Business Wire, an electronic news release service. It moves at 10 a.m. EST on the first business day of the month.
"We want to make sure everybody gets it at the same time," said Norbert Ore, head of the group's business survey committee. "Timing is worth a good bit in the marketplace. There's an inherent advantage in information somebody can glean about the economy or markets that others don't have."
The University of Michigan, by contrast, makes every effort to selectively disclose its latest data. It excludes the media from its list of subscribers and vows legal action against subscribers who share reports, threatening to bar their access.
The university's Institute for Social Research, which computes the index from monthly consumer surveys, says expenses dictate its sales policy.
"The subscriptions pay for the cost of the survey, but just barely," said Richard Curtin, the survey's director since 1976. "By keeping the data secret for a little while, we can earn some money to keep the survey going."
Last year, the surveys cost $824,100, according to the institute's budget figures. Its revenue from brokerages, companies researching consumer-buying habits and government agencies totaled $989,500, earning the institute a profit of $165,400.
The University of Michigan got $899 million in state and federal funds for the fiscal year ending next June 30. Its mission statement said such funds oblige it "to make available to the citizens of the state and nation that portion of its specialized knowledge which provides the necessary background for social decision."
Still, university officials say there's no contradiction between the university's obligations to the public and its sale, and disclosure, to investors of specialized knowledge such as the consumer index.
