Tag Archives: Ethics
Citi moves away from Bloomberg for its foreign exchange traders
by Chris Roush
Citigroup is stopping traders in its foreign exchange division from using internal chat groups on their Bloomberg terminals, reports Alice Ross of The Financial Times.
Ross writes, “Citi said shutting those chat groups would increase security and had the advantage that not everyone would need a terminal to access live internal information about clients’ trading activities – a sign that the bank is also seeking to reduce costs. Bloomberg charges up to $20,000 a year for the use of a terminal and almost all traders at investment banks have sole use of a terminal at their desk.
“The move is also an attempt by Citi to steer both traders and clients away from relying on news wires and towards its own internally produced market news.
“Other banks also use internal chat groups via their Bloomberg terminals. Comments made in the internal chat group can be seen by all members and are used to share information about what clients are buying and selling. Many use code words to identify clients due to security concerns.”
Read more here.
Tech reporters and the swag from Google
by Chris Roush
Jeff Saginor of The American Prospect writes about the free gifts that Google gives away at its annual tech conference to reporters who cover the company.
Saginor writes, “But Google isn’t really courting developers with events such as this; it’s courting the media. It wants its latest innovations blasted across the Internet’s echo chambers. So this year at I/O, Google upped the ante, giving everyone in attendance a Chromebook Pixel — a laptop running Google’s own operating system, retailing for $1,299. It’s the equivalent of Apple handing everyone a MacBook Pro on the way out the door. It made headlines across the web. And it’s everything that’s wrong with tech reporting.
“Technology events are not giveaways for Oprah’s favorite things—journalists don’t get to go home with bags full of expensive toys and then pretend to critically cover the companies that bribe them. As James Temple explains in The San Francisco Chronicle, tech writers will ‘tell you they’re routinely offered pricey gift baskets and all manner of smart phones, software, tablets and computers, often with no obligation to return or write about them.’ And last year, Brad Stone of Businessweek wrote that reporters at a Spotify launch party in San Francisco were treated to $300 bottles of tequila as parting gifts. It happens constantly. Of course most reporters don’t accept the gifts. But the casual relationship undermines the nature of serious technology reporting.
“Yes, for the most part gadgets are fun and cool and what’s the harm? But Google—for instance—has a long history of invasive advertising practices that get into some very murky questions regarding our civil liberties. By assuming that the bloggers and journalists in attendance would accept such a lavish gift, Google appears deeply cynical. And the media comes off as profoundly clueless.”
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Bloomberg’s quiet wealth management operation
by Chris Roush
John Carney of CNBC.com writes about BloombergBlack, the quiet wealth management operation controlled by Bloomberg LP, and what it might mean for the company’s financial data and news operation.
Carney writes, “That first bullet point seems almost like an attempt to salve any future wounds Bloomberg’s wealth management business might inflict on the customers of the terminal business. Look! We’re not telling customers to leave you for us! This isn’t competition! We’re complementary to you!
“But is that realistic? At $100 a month, BloombergBlack is priced pretty steeply. Even the affluent customers Bloomberg is targeting may balk at the idea of paying fees to more than one wealth manager.
“What BloombergBlack has going for it — other than the well-known brand — is a huge information infrastructure already in place. Customers will presumably have access to lots of information that is otherwise difficult to uncover. Investors who believe that more information will make them better investors will find this enticing.
“This is never going to be a source of revenue on the scale of the terminals. Online wealth management is a pretty low-margin business. But since Bloomberg already has so much of the underlying data infrastructure in place, it makes sense to find new ways to generate revenue from that infrastructure.
“As long as it doesn’t tick off the folks paying for the terminals too much.”
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The unique ethics situations that Bloomberg case exposes
by Chris Roush
Adam Geller of the Associated Press writes about how the Bloomberg snooping scandal exposes how new media companies face unique ethical situations.
Geller writes, “‘Many more journalism companies will face the type of competing values that the journalists at Bloomberg faced because, as the economic model for journalism changes, more companies, if they’re successful, are going to look like Bloomberg,’ said Kelly McBride, who teaches journalism ethics at The Poynter Institute.
“Today’s technology gives many types of news organizations access to information about consumers’ preferences for certain types of content, without clearly settled understandings of how that information should be used. Technology also has made it easier for reporters, and everybody else, to snoop.
“‘In a digital world in which everything online at some level, if you have the expertise, is probably available, this is simply reality,’ said Alex S. Jones, director of the Shorenstein Center on the Press, Politics and Public Policy at Harvard University.
“At the same time, new types of journalism ventures are relying on different constituencies, often without clear rules for engagement, McBride said. Non-profit news organizations rely on donors, rather than advertisers. Others rely on advertisers who pay to sponsor content.
“All together, the uncertainties of those new relationships will force media organizations to grapple with tough questions, McBride says.”
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Bloomberg can not take Wall Street for granted
by Chris Roush
John Gapper of The Financial Times writes about the Bloomberg LP snooping scandal, warning the financial data and news company about taking Wall Street for granted.
Gapper writers, “They could turn to its competitors, such as Thomson Reuters, or they could go it alone – creating their own instant messaging, pricing and data services, in the way that they have established ‘dark pool’ trading platforms to compete with exchanges. The internet has put the technology in their hands.
“Bloomberg does not have much experience of playing defence because it has spent its life on the attack, outflanking rivals with ‘the Bloomberg Way’ and expanding into news, television and magazines. (There is speculation that it wants to buy the Financial Times or The New York Times.)
“It took three attempts to get its response right, finally filling its trading screens with an apology from Dan Doctoroff, its chief executive. It is not used to saying sorry and, like other technology companies, its success has bred arrogance – it tends to think it knows best.
“‘It has a cult-like structure in which everyone is a believer,’ says one former Bloomberg executive. ‘There is such a degree of holy righteousness that journalism can only be done the Bloomberg Way that I was surprised by a failure of judgment on this scale.’”
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Senate panel may investigate Bloomberg
by Chris Roush
Sen. Carl Levin’s Permanent Subcommittee on Investigations, which has examined the financial meltdown and JPMorgan’s “London Whale” debacle, is being urged to launch a probe into Bloomberg’s snooping scandal, The New York Post reports.
Mark De Cambre and Kaja Whitehouse report, “At least one federal official has recommended that the powerful committee take the lead on investigating the extent of Bloomberg’s spying on Wall Street and government clients through its ubiquitous data terminals.
“The privately held news and information giant falls outside of the scope of most financial regulators, noted one source.
“Bloomberg has admitted that some reporters used the terminals to monitor when clients were signed into the service and what functions they were using.
“Besides Goldman Sachs, JPMorgan Chase and other big banks, officials at the Fed and the US Treasury have also expressed concerns that they were being monitored.”
Read more here.
JP Morgan demands to know what Bloomberg reporters accessed
by Chris Roush
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.”
Read more here.
Wall Streeters care more about their messages online than reporters snooping
by Chris Roush
Cyrus Sanati of Fortune writes about how the Wall Street bankers and traders who are the core Bloomberg customers are more worried about how some of their private messages using the company terminal made it on the Internet than they are about Bloomberg reporters using the terminal to snoop on them.
Sanati writes, “The bulk of the traders and bankers Fortune spoke to over the weekend concerning this story said that the snooping scandal had become more important to journalists than the greater financial community.
“But then came word Monday that a trove of Bloomberg messaging data had been found online. The data was old, but contained user info, trading data and sensitive communications between bankers, traders and their clients. Bloomberg messenger is an email and instant messaging program. A great deal of trading and price discovery goes on in these chats — especially in the opaque over-the-counter market. It is where essentially large parts of the financial industry conduct the bulk of their business. Bids and offers are sent between brokers and buy side professionals and deals are sealed all on Bloomberg chat. Bloomberg actively scans messages to help their customers seemingly keep records of their bids and offers.
“‘They have a system to capture your broker runs in Bloomberg and feed through into Excel,’ one fixed income trader told Fortune. ‘These runs come in every two seconds so it’s a priceless tool for us.’
“Bloomberg employs an army of ‘message mining analysts’ who, according to a recent job placement advertisement picked up by the Financial Times, ‘are responsible for ensuring that price information across Bonds, CDS, Loans and Mortgage products are properly picked up from individual messages and returned back to the client.’
“The key here is ‘returned back to the client.’ But with the cache of messages that were recently found online, some traders are concerned that their data isn’t being handled properly and could fall into the wrong hands. There is also concern that the company may be using that information to help Bloomberg Tradebook or Bloomberg Pool, the company’s growing broker-dealer and dark pool trading outfits, to gain an informational advantage over the clients.”
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Apologies are a good first step for Bloomberg
by Chris Roush
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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Customers fear that Bloomberg is becoming a competitor
by Chris Roush
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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