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Fed watchdog probes economists' holdings in UK forecasting firm

The Office of Inspector General of the Federal Reserve is in a preliminary investigation of four economists and a possible conflict of interest, The Wall Street Journal reported Oct. 10, citing "a person familiar with the matter."

The four have owned shares in London-based Now-Casting Economics Ltd., which sells high-frequency, short-term economic forecasts. One of the four, Domenico Giannone, is also a co-founder of Now-Casting and serves as assistant vice president in macroeconomic and monetary studies at the New York Fed.

The watchdog was tipped off by Economic Alchemy LLC, which, the WSJ noted, is engaged in a trademark fight with Now-Casting and the Fed.

Giannone, for his part, said he had disclosed his holdings and resigned from Now-Casting's board before joining the regulator, according to the WSJ. The New York Fed said it had been aware of his role in the company. Furthermore, Economic Alchemy's information does not indicate any of the economists traded on nonpublic information.