Bloomberg News is in its biggest crisis ever
The service apologizes after allegations surface that its reporters were snooping on customers.
When I worked at the news service, a division of Bloomberg LP, from 1997 to 2005, top managers repeatedly stressed that the people who read our articles on terminals weren't just "readers," they were "customers."
Reporters would sometimes visit "customers" to find out what they liked and didn't like about Bloomberg. It was awkward for journalists whose first mission is to report news, but there were clear financial motivations: More terminals sold -- at $20,000 each per year -- meant more money for employee bonuses.
Those terminals (pictured) are now being scrutinized on word that Bloomberg reporters were using the machines to spy on clients. As The New York Times noted, some reporters would type a "Z" next to a company's name to get information on individual subscribers, such as when a customer had last logged on or information about their chats with customer service representatives.
That potential privacy violation had the company on the defensive Sunday.
"At no time did reporters have access to trading, portfolio, monitor, blotter or other related systems. Nor did they have access to clients' messages to one another," wrote Editor-in-Chief Matthew Winkler on Bloomberg View. "They couldn't see the stories that clients were reading or the securities clients might be looking at."
Given the firm management style at Bloomberg, it seems reasonable to assume that the practice, which seems to have occurred for many years, was known about by top bosses. But it's still unclear exactly who knew what, and when.
When I was at Bloomberg, I don't remember anyone telling me how to access to this customer data. Then again, this information would have been of most interest to people covering Wall Street, which I didn't do. This data isn't something that would be easy for someone to discover on their own.
Besides, there was a simpler way to see if someone was logged onto a terminal. By typing "<WHO>" and the person's name, users can tell if a subscriber is logged in to the system. Users can also send each other messages using the message function.
Whether Bloomberg would restrict the ability of users to access this kind of client information remains to be seen. A spokesman for New York company declined to comment. This crisis is probably the biggest challenge to its credibility since the service was founded in 1990.
Customers of Bloomberg News, such as Goldman Sachs (GS) -- whose complaints forced the company to restrict reporters' access to customer data -- and JPMorgan (JPM), have found the episode unnerving. The Federal Reserve and European Central Bank are also investigating the matter, according to The Telegraph. Other investigations are inevitable.
Some observers have suggested that Bloomberg hire an outside party to investigate or hire an independent ombudsman who can address questions of fairness and objectivity. These steps would be a good start. Unfortunately, this scandal isn't going away anytime soon.
--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
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