JPMorgan Chase & Co, one of the biggest  customers of Bloomberg LP, said on Wednesday it has sent a formal legal request  asking the financial data and news company to provide details of what bank  information Bloomberg News reporters had been able to see.

David Henry of Reuters writes, “JPMorgan’s statement comes after Bloomberg acknowledged late last week that  its reporters had limited access to data about clients’ terminal usage, such as  when a customer logs in, contacts the help desk or delves into the system for  information about assets, such as equities or bonds.

“The largest U.S. bank is seeking logs for five years of what precisely  Bloomberg journalists accessed concerning the use of terminals by JPMorgan  employees, a bank official said. Bloomberg has about 2,400 journalists  worldwide.

“JPMorgan said it is also seeking ‘confirmation’ of controls that Bloomberg  has put in place to stop future breaches.

“The bank declined to provide a copy of what it described as a formal request  from its legal department.

“A Bloomberg spokesman declined to comment.”

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Dan Orlando of the New York Business Journal writes about how Bloomberg LP’s quick apologies for allowing its reporters access to information about its clients was a smart move.

Orlando writes, “Today I talked to Mark J. Prak, a communications lawyer based in Raleigh, N.C., about Bloomberg’s Snoopgate. He says the confession should significantly stem the tide of possible cancelled subscriptions.

“‘The straight-up approach is likely to be an effort to defend their business and make sure that their customer base does not become disenchanted with them,’ Prak told me. ‘I give them credit.’

“Some commentators, while not defending Bloomberg, are arguing that people should put the scandal in perspective — while others say it reveals a basic character flaw in the financial media, a win-at-all-costs mentality similar to the greed and cheating so often portrayed on Wall Street itself.

“Bloomberg has been harshly critical of itself while at the same time insisting it won’t happen again.”

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Peter Eavis and Nathaniel Popper of The New York Times write about how some of Bloomber LP’s biggest customers fear that it is becoming a competitor.

Eavis and Popper write, “In recent years, Bloomberg has offered new ways to trade stocks, bonds and more complicated financial products, potentially taking revenue from subscribers to the ubiquitous Bloomberg desktop terminals, which contain a vast store of market data. The expansion is even leading Bloomberg to offer traditional Wall Street services like wealth management and research.

“‘If you add all this stuff up together, they do look increasingly like a brokerage business,’ said Larry Tabb, founder of the consulting firm Tabb Group.

“He said that Bloomberg was not yet a dominant force in these activities and had been careful to placate the concerns of subscribers. But, he said, ‘it makes some of these brokers think, are these guys friend or foe?’

“Bloomberg says its trading operations are walled off from its data operations and asserts that it has won the trust of clients over the years. The company is eager to protect both its revenue and the wealth of Michael R. Bloomberg, which are still primarily generated by the terminals business.”

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Andrew Edgecliffe-Johnson of The Financial Times writes about Bloomberg News editor in chief Matthew Winkler, who is the author of its “Bloomberg Way” stylebook and the conscious of the news service as it battles to overcome the perception that it spied on its clients through its terminal.

Edgecliffe-Johnson writes, “The story has left Wall Street asking whether Bloomberg needs a Chinese wall between its editorial and commercial teams, and shone a spotlight on Mr Winkler’s role as the demanding guardian of the newsroom’s culture.

“The bow-tied former credit markets correspondent has set the tone of Bloomberg News’ coverage, from the early days when its advantage lay in its exclusive data about obscure corners of the market, to the Twitter era, when Mr Winkler has highlighted its mission to sort information from misinformation for clients with fortunes at stake.

“The Bloomberg Way, which has grown from a 30-page manifesto into a 376-page book, was ‘a strategy to prove that we could compete with everybody,’ Mr Winkler recalls in a video on Bloomberg’s careers site.

“It says Bloomberg should be the first, fastest, factual, final and future word, and sets down rules on everything from sourcing to the avoidance of the word ‘but.’

“Assembled from his meticulous weekly feedback to staff (emails include lines such as ‘‘most ever’ is redundant’ and ‘Smarter means more, better faster. Seize the day!’), it includes a 660-word Bloomberg-style summary of Genesis (‘The world God created was good. But Adam and Eve – being human – blew it.’).”

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Zachary Seward of Quartz has gotten a copy of a typical Bloomberg contract and discovered that it allows the company to review customer usage “solely for operational reasons.”

Seward writes, “The contract should help shed light on whether Bloomberg faces any legal risks following the revelation that, until April, all of its journalists could view data about how and when customers used their terminals. Bloomberg executives have called that access a ‘mistake‘ and ‘inexcusable,’ and the company has hired outside lawyers to advise it on handling the fallout.

“Oceanside’s contract with Bloomberg was written and signed in 2001; it has been renewed every two years, and remains in effect. The city posted the contract online. The passages in it that pertain to surveillance haven’t changed in more recent contracts drawn up for terminal subscribers, according to people who have signed them. Some Bloomberg customers, like large banks, undoubtedly sign much more complex contracts than Oceanside’s.

“We aren’t lawyers, and won’t pretend to be. But there are two passages in Oceanside’s contract that seem to permit Bloomberg to monitor usage of the terminal. However, both include important caveats:

• “Lessee acknowledges and understands that Lessor may monitor, solely for operational reasons, Lessee’s general use of the Services.” (The lessee, in this case, is Oceanside, and the lessor is Bloomberg.)
• “Lessor reserves the right to audit and monitor (whether physically or electronically) (i) the requests of Lessee for the Information, the Exchange Data, and Additional Information and (ii) the number of Authorized Computers enabled to access the Information, Exchange Data and Additional Information.”

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Felix Salmon of Reuters writes about the bargain that bankers, investors and analysts agree to when they sign up for a Bloomberg terminal.

Salmon writes, “So, Bloomberg says it made a mistake, it has apologized, and it is not going to happen again. End of story? Not entirely. For one thing, the Europeans have pretty strict privacy laws, and are talking to Bloomberg about what happened; no one knows how those talks could conclude. On top of that, for all that Winkler’s apology runs under the headline ‘Holding Ourselves Accountable,’ so far there have been no reports that anyone at Bloomberg is being held accountable. A Bloomberg spokeswoman declined to comment.

“Bloomberg’s reporters use the Bloomberg terminal for everything they do: they’re an inextricable and central part of the Bloomberg social network. And while the newsroom has now lost its access to certain functions, the company would not comment on the degree to which the changes are affecting the vast majority of Bloomberg employees who don’t work in the newsroom. For the time being, it seems, thousands of Bloomberg employees around the world have retained their access to key information about employees of Goldman Sachs, the Federal Reserve, the ECB, the US Treasury, and countless other organizations — information which, in many cases, is fiercely protected even within the organizations themselves. (If an employee has been quietly suspended and is no longer actively working for the organization in question, that’s not going to be common internal knowledge, but it’s easy to see if you can see when they last logged in to their Bloomberg.)

“Many of Bloomberg’s clients, especially the Europeans, are likely to be unhappy about the fact that such sensitive information could continue to be widely available within the company. But, just like participants in other social networks, they don’t have a lot of choice in the matter. The more time you spend on your Bloomberg, the more value you get out of it — and the more that Bloomberg staffers are going to know about when and how you work. That’s been the bargain from the beginning, whether you liked it or not.”

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