Tag Archives: Bloomberg
The unanswered questions in the Bloomberg scandal
by Chris Roush
Stephen Gandel, a senior editor at Fortune, writes about what he considered to be the six big unanswered questions in the Bloomberg snooping scandal.
Here are two of them:
How much more info did Bloomberg reporters have access to than the rest of us?
But just because you put up the grey dot doesn’t mean that Bloomberg reporters weren’t able to track your usage. A Bloomberg spokesperson declined to comment on this point. Doctoroff and Winkler have tried to explain it away, but it’s not clear how much info Bloomberg reporters had access to. They say the special access was cut off last month.
Bloomberg has confirmed that their reporters had access to a log-on history. Beyond that it’s not clear. Winkler said the reports could only see aggregate user data, “akin to being able to see how many times someone used Microsoft Word vs. Excel.” But other ex-Bloomberg reporters have said that you could type in a specific person and see the types of things they were looking at. So that doesn’t sound like aggregate data. And what exactly is the Bloomberg terminal equivalent of Word and Excel? Some reports have said that Bloomberg reporters were able to tell who read their stories. That seems like detailed snooping.
Will banks sue Bloomberg?
The revelation that Bloomberg reporters were spying on clients came to light after complaints from Goldman. But now it appears, according to latest reporting from the New York Times, that pretty much every big bank has had some beef with Bloomberg. All of a sudden that unexplained leak makes sense. Remember being stumped by who a “source with knowledge of the bank’s activities” was? Well that source was your Bloomberg terminal.
It’s not clear they can sue, but if they do they will have a good case. Fortune has a Bloomberg terminal. And it looks like the contract we signed with Bloomberg, which appears to be the generic one used by the company, gives its employees the right to spy on us in two places. In one place, the contract states, “Lessee [Fortune] acknowledges and understand that Lessor [Bloomberg] may monitor, solely for operational reasons, Lessee’s general use of the Service.” One could interpret that to mean Bloomberg could only use the information to make sure the unit was operating properly. But Bloomberg could argue that the statement referred to anything that improved its users “operational” experience. And if a particularly embarrassing story about you improved other users’ experience that day, then Bloomberg seems to be covered.
Read the rest here.
Yes, I once drank the Bloomberg Kool-Aid
by Chris Roush
National Public Radio’s David Folkenflik interviewed me Monday afternoon about the culture at Bloomberg News that would allow reporters to access personal information about some of its clients — the main crux of the scandal that has now enveloped the company.
You can listen to Folkenflik’s segment from “All Things Considered” here. You’ll get a couple of clips from our talk.
Here is the gist of what I told Folkenflik, along with some conclusions:
I was Bloomberg News’ U.S. beverage reporter from 1997 t0 1999, working out of its Atlanta bureau. That meant that I covered publicly traded companies such as Coca-Cola, PepsiCo, Anheuser-Busch, Coors and Robert Mondavi. I drank the Bloomberg Kool-Aid.
My previous employer was the Atlanta Journal-Constitution, where I had also covered Coca-Cola. But the stories I wrote for Bloomberg were much different because of the target audience — investors, analysts, buy-side and sell-side researchers and short sellers. At the Atlanta paper, I wrote for a general audience that wasn’t necessarily interested in investing in beverage stocks.
Working for Bloomberg, even during those early days of the news service, brought cache with Wall Street sources. Bankers, investors and analysts knew you were a serious business journalist if you worked for Bloomberg, and they were more likely to return your phone calls.
The Bloomberg terminal that sat on our desks also helped our reporting. We would look up phone numbers and email address of people on the terminal, and we could see if a person had a terminal and whether they used it. If they had a terminal on their desk, we could message them directly using the terminal.
Another useful reporting tool on the terminal — available only to Bloomberg reporters — was that we all put notes into the system about our sources. You could call up a CEO of a company or an analyst and see what other Bloomberg reporters had to say about them, such as what questions they were more likely to answer. It often included their cell phone numbers and other tidbits. (Editor in chief Matt Winkler once showed this feature to one of my beverage sources, who was incensed that I had entered into the system that she was sometimes difficult to work with.)
The terminal also helped you write stories that no other business journalists could do. For example, I remember writing stories about how some beverage stocks were poised to rise in the future because of money flow data that showed more money was being used to buy the stock than was being received from those selling the stock. It was data I had never seen before, but which I now had easy access to on the terminal. (For those of you with a Bloomberg terminal, see “Coke May Be Poised to Rise as Money Flows Into Stock” from Aug. 20, 1998.)
I don’t recall ever using the now-infamous Z and UUID functions on the terminal to check on information about sources. Then again, I wasn’t covering Wall Street or investment banks.
I also don’t think that the current Bloomberg journalists who used this access, which has now been removed by the company, did anything wrong. All business journalists, not just those at Bloomberg, are taught to aggressively look for stories. Those that used their access to client data to mine for stories were using the tools that were available. I don’t see anything wrong with what we’ve been told happened. Let’s remember, it’s Wall Street bankers and traders who are complaining. They’re one of the lowest life forms on the planet.
Now, let me talk about what effect this might have on Bloomberg’s journalism. I have many friends, former co-workers and former students who work there, so understand that the following is with me thinking about them. I have a lot of respect for all of them.
What concerns me is that the Wall Street sources who helped make Bloomberg’s coverage the premiere news source on markets and companies are now likely to be more leery with what they share with Bloomberg, both on the terminal and on the phone with its reporters. In the end, I think that these sources will decide that the Bloomberg terminal, and its news coverage, help them make money, and the relationship will be mended.
This has been a blow to Bloomberg’s carefully developed and cultured image, and the company has done itself no favors with how it has handled the coverage since the scandal broke last Thursday night. It no longer controls the story — other business media organizations are all over it. Bloomberg should have published the definitive story about what happened this weekend, painfully detailing what information its reporters had and how it was used, leaving no stone unturned. That’s what we’ve come to expect from Bloomberg.
For a news organization that prides itself on reporting and writing stories that are among the best, if not the best, in business journalism, exposing what others don’t want exposed, its inability to do just that with a story that resides in its own newsroom has been the biggest surprise.
Too much Kool-Aid has been consumed.
Why the Bloomberg scandal is overblown
by Chris Roush
Heidi Moore, a U.S.-based business journalist for The Guardian in London, breaks down the Bloomberg snooping scandal and concludes that it’s much ado about nothing.
Moore writes, “So it’s important to separate some key points, around this: were Bloomberg reporters illegally or unethically using the information available to them? And if so, did it drive their journalism? What is the pragmatic effect of the terminal quasi-scandal?
“On the first point, there seems to be no evidence of unethical behavior from reporters, at least. It’s easy to see that if the information was made available to Bloomberg reporters as part of their work tools, they wouldn’t question its use. Wall Street, which uses every available bit of information itself, understands this. As one Wall Street trader put it to me: ‘it’s not difficult to understand why someone with access to that information would use it. Bloomberg captures everything.’
“On the second point – that of driving journalism – it’s likely that the claims of a Bloombergian information monopoly are highly overblown. Any decent financial reporter would be dubious that Bloomberg reporters could have gained much high-quality journalism from the terminal alone. There’s no evidence that really valuable scoops – such as those on mergers and acquisitions – could have come from mining terminal information. Despite the hype, the information available from the terminal was poor relative to what a reporter would need to actually construct any kind of useful story. It could provide leads, perhaps, but not replace the hard work of reporting.
“Bloomberg’s genuinely award-winning journalistic work – on health reform and other issues – was based on shoe-leather reporting and did not and could not have come through mining the terminal. Amusingly, JP Morgan complained that Bloomberg reporters used terminal information to judge that some traders had been let go after the London Whale debacle. Bloomberg also first reported that the multibillion-dollar London Whale trade even existed, which is a much bigger and more important story, and was clearly not information that could be gathered from a terminal.”
Read more here.
Former SEC head calls for independent review of Bloomberg
by Chris Roush
An independent review is needed after Bloomberg‘s admission that its reporters had access to some proprietary client information on its data terminals, former SEC Chairman Harvey Pitt told CNBC on Monday.
Matthew Belvedere, a producer for CNBC’s “Squawk Box,” writes, “The admission indicates an oversight failure at the company, said Pitt, who was chairman of the Securities and Exchange Commission under President George W. Bush.
“‘All we know is what the people who put all of this terrible activity in place are now telling us,’ Pitt said in a ‘Squawk Box‘ interview. ‘We just have Bloomberg’s denials. And at this point, those aren’t very credible.’”
Belvedere later writes, “Bart Chilton, commissioner at the Commodities Futures Trading Commission, told CNBC, ‘There’s something of a void here in that there is no regulator that really looks after new information providers.’
“But he said that the CFTC plans to pass a rule later this week that could allow the agency an oversight role.”
Read more here.
Bloomberg needs to release data about its reporters
by Chris Roush
Arik Hesseldahl of All Things D, a former Bloomberg reporter, believes that Bloomberg News needs to release the data of how often its reporters used the functions that allowed it to see information about its clients.
Hesseldahl writes, “How many reporters used the Z function — a software command that displays whether or not a customer is logged in and which functions he or she has been using the most — over the many years it was available to them? Chances are that Bloomberg has the data on precisely how often it was used and by which reporters. It could with some effort call in a third party to perform a detailed audit on this, and then disclose the findings of that audit to clients and the rest of the world.
“I’ve asked Bloomberg about this. Spokeswoman Lauren Meller didn’t have an immediate answer. If I get one I’ll post it here.
“If you’re going to properly understand the controversy that has emerged about the company in recent days, you need to understand the basics of the terminal itself. Bloomberg is at its very heart a financial data software company. In executing a “function” on its terminals, which are seen as status symbols of the financial industry, you type a command, usually one to four letters, and hit the Go key, which replaces the Return key on the conventional keyboard. When looking up, say, the price and fundamentals of Apple shares, you type AAPL, hit a key labeled Equity to indicate the first four letters are intended to indicate a stock ticker symbol, and then hit Go.
“During the year I worked there I never heard about the so-called “Z function” at the heart of the current controversy, but its existence isn’t surprising. If you haven’t been paying attention, here’s what it’s all about. All 2,000-odd reporters at Bloomberg News have these terminals on their desks and use them to conduct research, report, write and publish their stories, and to communicate within the organization and without.”
Read more here.
Bloomberg user notes leaked online
by Chris Roush
More than ten thousand private messages sent between users of Bloomberg’s financial terminals have leaked online, report Daniel Schafer and Andrew Edgecliffe-Johnson of The Financial Times.
Schafer and Edgecliffe-Johnson write, “The leaked messages were uploaded to the internet by Steve Raaen, then a Bloomberg employee, while he was working for the company on a data-mining project for clients’ benefit. It is believed he intended to to upload them to a secure site.
“Mr Raaen, who left Bloomberg in March 2011, declined to comment. Bloomberg said use of such emails outside its system ‘would have been a clear violation of our policies’ and it was considering ‘all potential legal’ actions. Such a breach could not happen now, it added, due to new technology and ‘upgraded’ controls that would prevent such information leaving its system.
“The project on behalf of Bloomberg clients, called ‘message scraping,’ entailed Mr Raaen, a business manager, combing through traders’ messages to get better pricing information on financial products that are traded over the counter.
“The messages included trade information and other confidential details from global banks including Barclays, Citigroup, Deutsche Bank, Goldman Sachs, HSBC, Nomura JPMorgan and Morgan Stanley.”
Read more here.
Bloomberg reporter leaves to write book
by Chris Roush
Nina Mehta, who covered exchanges and trading for Bloomberg News, quit her job on Friday to write a book about her beat.
“I left Bloomberg News to write a book about what I’ve been covering for more than a decade: the structure of U.S. equity markets and how it’s changed over the last 15 years,” said Mehta in a message to Talking Biz News.
Mehta had been with Bloomberg since January 2010. She wrote about U.S. market structure, equity and options exchanges, institutional trading, dark pools, regulatory topics, market making,
broker-dealers, wholesalers, electronic trading, algorithms, and technology.
Before that, she was a senior editor at Traders magazine, where she wrote about U.S. institutional equities and options trading, exchanges, ECNs, dark liquidity, broker-dealers, market-making, market structure, Reg NMS and other regulatory issues.
She was also managing editor of Derivatives Strategy from 1998 to 2001. She wrote about risk management, equity derivatives, the developing credit derivatives market, regulation, exchanges and the OTC markets, hedge funds and technology for the main U.S. monthly magazine for financial derivatives professionals. The magazine ceased publication in June 2001.
Mehta has a bachelor’s degree from Wesleyan University and a master’s degree from Columbia.
WSJ, Bloomberg win awards from Silurians
by Chris Roush
The Wall Street Journal is the winner in the business and financial category of the Society of the Silurians‘ 2012 Excellence in Journalism Awards Competition.
Jean Pulliam, Rob Barry and Jean Eaglesham of the Wall Street Journal won for their exhaustive six-month investigation that uncovered insider trading by a thousand corporate executives who traded stock in their own companies ahead of potentially market-moving corporate news announcements.
In addition, Susan Antilla won the prize for commentary for a series of eyeopening Bloomberg columns that illuminate how abuses by financial firms, lax regulation and unfair industry practices harm investors, consumers and even employees.
Bloomberg reporter Esme E. Duprez won the prize for magazine reporting for her sensitive and finely-tuned piece on income inequality and its ramifications on social mobility. Titled “Poor Forever? Connecticut’s Ribbon of Hardship,” it chronicles two families as they struggle to move up the financial ladder against great odds. She poignantly brings to life the reality of the growing gulf between rich and poor.
The Silurians, founded in 1924, is an organization of veteran journalists dedicated to excellence and journalistic integrity.
I know when you logged in last summer
by Chris Roush
Hilary Sargent has a site called ChartGirl where she makes charts explaining complicated news events.
The site has been named to Time’s 50 Best Websites of 2013.
A bunch of the charts are about media-related news, including one she posted Sunday on the Bloomberg spying scandal.
See a larger version here.
Bloomberg’s Winkler: Error is inexcusable
by Chris Roush
Bloomberg editor in chief Matt Winkler writes that the error allowing the news service’s journalists to see information about its clients on its terminals is “inexcusable.”
Winkler writes, “As we’ve grown, and as data privacy has become a central concern to our clients, we should go above and beyond in protecting data, especially when we have even the appearance of impropriety. And that’s why we’ve made these recent changes to what reporters can access.
“This leads to a second point lost in much of this weekend’s conversation: The protection of important customer data has been essential at Bloomberg since our founding more than 30 years ago. We have never compromised the integrity of that data in our reporting.
“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. They couldn’t see the stories that clients were reading or the securities clients might be looking at.
“Like all other Bloomberg employees, our reporters, upon hiring, enter into a confidentiality agreement that strictly prohibits them from discussing non-public Bloomberg documents and proprietary information about the company and its clients in their reporting.”
Read more here.
