With new concerns emerging about practices at its news division, Bloomberg LP, the sprawling financial services company founded by Michael R Bloomberg, scrambled to shield its lucrative terminal business and appease nervous customers.
The report on Friday that a Bloomberg reporter had used the company's financial data terminals to monitor a Goldman Sachs partner's logon activity has set off a ripple effect of inquiries from other worried subscribers, including JPMorgan Chase, Deutsche Bank, the US Federal Reserve, US Treasury Department and the European Central Bank.
The revelations now stretch back to 2011, when UBS complained after a Bloomberg Television host alluded on air to his monitoring of the London-based rogue UBS trader Kweku Adoboli's terminal logon information to confirm his employment status at the bank. Then, last summer, executives at JPMorgan Chase questioned Bloomberg reporters' techniques after they were among the first to report on the trader Bruno Iksil, nicknamed the London Whale. "I'm unaware of any record of a complaint from either bank on this issue," said Ty Trippet, a Bloomberg spokesman.
The fallout continued on Monday. Bloomberg has now received roughly 20 inquiries about whether reporting practices violated the company's policies about getting access to subscriber information, including one from Bank of America.
"Since the news came out, my executive team and I have personally reached out to more than 300 clients," Daniel L Doctoroff, chief executive of Bloomberg L P, wrote in a blog post late Monday night. "We started each conversation with an apology." A person briefed on those conversations said no one immediately cancelled their subscription.
Every Bloomberg user who logs onto a terminal is greeted with a screen that contains a letter from Doctoroff calling the practice a "mistake" and addressing privacy concerns.
Michael Bloomberg, who stepped away from day-to-day operations when he became mayor, declined to comment on the situation at the company that bears his name. "No, I can't say anything. I have an agreement with the Conflict of Interests Board," he said in a news conference on Monday.
The company also began to discuss possible legal ramifications. While people close to the company doubted that clients would threaten legal action, Bloomberg hired outside lawyers on Friday to steer it through the crisis. The lawyers, according to the people close to the company, have assured Bloomberg that there is no basis for a lawsuit, since the subscribers did not suffer any damages and the information obtained was more trivial than confidential.
But some bank executives said the snooping could have violated a common confidentiality clause in their contracts with Bloomberg.
After the UBS and JPMorgan Chase complaints, Matthew Winkler, editor in chief at Bloomberg News, instructed his chief of staff, Reto Gregori, to make sure the newsroom's use of a function called UUID had been cut off, according to a person with direct knowledge of the matter. Trippet denied that Winkler had made that request.
The UUID function allowed reporters to view a specific subscriber's contact information, when the subscriber had last logged on and to monitor chats between subscribers and customer service representatives. But some reporters continued to use the function until last month, when Goldman Sachs executives contacted Doctoroff directly to complain.
Bloomberg has at least 315,000 subscribers, and its proprietary terminals reign supreme on most traders' desks. The price tag, combined with the breach of privacy accusations, have aggravated tensions between Bloomberg and its subscribers, several Wall Street executives said.
What is more, a report in The Financial Times that a former Bloomberg employee had leaked online thousands of messages from a single day in 2009 and a week in 2010 between terminal subscribers threatened to further fray trust between Bloomberg and the hedge funds, investment banks and money managers who use the service. A Bloomberg spokesman said if The Financial Times report was true and the former employee had posted the messages, they would have been collected only in cooperation with clients to improve their technology.
© 2013 The New York Times News Service/BS
The report on Friday that a Bloomberg reporter had used the company's financial data terminals to monitor a Goldman Sachs partner's logon activity has set off a ripple effect of inquiries from other worried subscribers, including JPMorgan Chase, Deutsche Bank, the US Federal Reserve, US Treasury Department and the European Central Bank.
The revelations now stretch back to 2011, when UBS complained after a Bloomberg Television host alluded on air to his monitoring of the London-based rogue UBS trader Kweku Adoboli's terminal logon information to confirm his employment status at the bank. Then, last summer, executives at JPMorgan Chase questioned Bloomberg reporters' techniques after they were among the first to report on the trader Bruno Iksil, nicknamed the London Whale. "I'm unaware of any record of a complaint from either bank on this issue," said Ty Trippet, a Bloomberg spokesman.
The fallout continued on Monday. Bloomberg has now received roughly 20 inquiries about whether reporting practices violated the company's policies about getting access to subscriber information, including one from Bank of America.
"Since the news came out, my executive team and I have personally reached out to more than 300 clients," Daniel L Doctoroff, chief executive of Bloomberg L P, wrote in a blog post late Monday night. "We started each conversation with an apology." A person briefed on those conversations said no one immediately cancelled their subscription.
Every Bloomberg user who logs onto a terminal is greeted with a screen that contains a letter from Doctoroff calling the practice a "mistake" and addressing privacy concerns.
Michael Bloomberg, who stepped away from day-to-day operations when he became mayor, declined to comment on the situation at the company that bears his name. "No, I can't say anything. I have an agreement with the Conflict of Interests Board," he said in a news conference on Monday.
The company also began to discuss possible legal ramifications. While people close to the company doubted that clients would threaten legal action, Bloomberg hired outside lawyers on Friday to steer it through the crisis. The lawyers, according to the people close to the company, have assured Bloomberg that there is no basis for a lawsuit, since the subscribers did not suffer any damages and the information obtained was more trivial than confidential.
But some bank executives said the snooping could have violated a common confidentiality clause in their contracts with Bloomberg.
After the UBS and JPMorgan Chase complaints, Matthew Winkler, editor in chief at Bloomberg News, instructed his chief of staff, Reto Gregori, to make sure the newsroom's use of a function called UUID had been cut off, according to a person with direct knowledge of the matter. Trippet denied that Winkler had made that request.
The UUID function allowed reporters to view a specific subscriber's contact information, when the subscriber had last logged on and to monitor chats between subscribers and customer service representatives. But some reporters continued to use the function until last month, when Goldman Sachs executives contacted Doctoroff directly to complain.
Bloomberg has at least 315,000 subscribers, and its proprietary terminals reign supreme on most traders' desks. The price tag, combined with the breach of privacy accusations, have aggravated tensions between Bloomberg and its subscribers, several Wall Street executives said.
What is more, a report in The Financial Times that a former Bloomberg employee had leaked online thousands of messages from a single day in 2009 and a week in 2010 between terminal subscribers threatened to further fray trust between Bloomberg and the hedge funds, investment banks and money managers who use the service. A Bloomberg spokesman said if The Financial Times report was true and the former employee had posted the messages, they would have been collected only in cooperation with clients to improve their technology.
© 2013 The New York Times News Service/BS