Tag Archives: Ethics
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.
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.
Three Reuters editors reprimanded for not disclosing FBI visit
by Chris Roush
Three Reuters editors have been reprimanded for failing to tell their superiors that the home of a now-terminated social media employee had been raided by the Federal Bureau of Investigation, Talking Biz News has confirmed from multiple sources.
Kenneth Li is no longer global editor of Reuters.com, while social media editor Anthony De Rosa and editor Robert MacMillan were given letters of reprimand. All three are still working at the company.
The actions were related to deputy social media editor Matthew Keys, who was fired by Reuters last month after he was indicted by a federal grand jury in Sacramento, Calif., on three criminal counts alleging that he helped members of the Anonymous collective hack into computer systems of the Tribune Co. The alleged events occurred before he joined Reuters, the indictment indicated. He has maintained his innocence and claimed that his firing from Reuters was not related to the indictment.
Keys told Li and De Rosa in October that his home had been searched by the FBI, but they believed he was not being investigated. MacMillan then found out about it as well. MacMillan was told about the FBI search when Li asked him for advice on how to handle the situation. His managers did not know he was a target of the investigation until the indictment.
Keys, who was hired in early 2012, was indicted in March and then shortly thereafter in a meeting told a group of other news service managers — including chief operating officer Stuart Karle, global editor for ethics and standards Alix Freedman and digital executive editor Jim Roberts – that he had told Li and De Rosa about the FBI search.
However, apparently Jim Impoco, who was executive editor of Reuters digital, was told about the raid by either Li or DeRosa in 2012. Impoco is no longer with the company. Keys was told that superiors had been informed.
“I am surprised to learn the company disciplined three of my former colleagues,” said Keys to Talking Biz News on Sunday. “If true, the company’s assertion that my colleagues failed to notify anyone at Thomson Reuters about the incident is inconsistent with what I was told in October 2012.”
Talking Biz News asked Reuters this weekend about the reprimands and the meeting where Keys told management. A Reuters spokeswoman referred questions to Barb Burg, vice president and global head of communications for Reuters, who told Talking Biz News she could not comment one way or another about the facts.
Li referred a message from Talking Biz News to Burg, while MacMillan said he did not want to talk. De Rosa and Impoco did not respond to a message.
Li is now working on a project for Reuters News, according to Burg. The project is examining how news gets distributed and how to make it easier and more logical.
The reprimands are not well known within the Reuters news operation.
An important milestone in Bloomberg’s maturation
by Chris Roush
David Schlesinger, the former editor in chief of Reuters, writes about the Bloomberg scandal where his former rival has been criticized for allowing its reporters to access information on how Wall Street bankers are using their Bloomberg terminals.
Schlesinger writes, “One is what everyone has been focussing on: the fact that Bloomberg in addition to looking at aggregated usage data like any modern, business-oriented media company should, seems to have crossed the line into looking at companies and individuals. In addition to the privacy concerns, there’s the very real issue that trading strategies could be compromised if ever the usage data got too granular (Has company A stopped reading about China and started reading about Turkey? Does it seem like company B is interested in fixed income instead of equities these days?)
“But the other is about companies that get too big and too arrogant… and about how when they stumble there’s an unmistakable Schadenfreude. There’s a lot of piling on at the moment. Competitors feel glee (and relief); clients sense an opportunity to renegotiate; fellow journalists jump at the chance to take the powerful down a peg.
“My guess is that this will be an important milestone in Bloomberg’s maturation as a company. The necessary lines between commerce and journalism will be reaffirmed (But let’s remember how brave Bloomberg was already in publishing its bravura China series at the risk of considerable financial harm). Ethical boundaries will be rethought and retaught, hopefully throughout the industry.
“And Bloomberg’s news and terminal business will in the end continue to be judged on the one question that Wall Street really cares about: ‘Does it help us make money?’”
Read more here.
Bloomberg reporters went on sales calls
by Chris Roush
William Launder of The Wall Street Journal writes that Bloomberg journalists used to go on sales calls to meet with some of the financial news and data organization’s largest clients — a reason why they had access to information about Wall Street bankers.
Launder writes, “Mr. Doctoroff described the terminals business and news operation as complementary: the large and lucrative terminals business helps pay for an editorial service that in turn draws subscribers by delivering market-moving news.
“But there is a ‘flip side’ to the business model too, Mr. Doctoroff said. ‘When you assure editorial independence, your reporters also do stories on very important clients that can create a level of discomfort sometimes. That’s the way it is, and we have to live with that tension,’ he said. Mr. Doctoroff said a strict division separates Bloomberg’s sales department from its news operations.
“Bloomberg isn’t alone in its practice of recruiting journalists to go on visits to customers. Senior editors from Dow Jones Newswires have occasionally participated in sales meetings to help explain different news products. Dow Jones & Co., publisher of The Wall Street Journal, competes with Bloomberg in financial news and some other data services.
“A Dow Jones spokesperson confirmed that senior editors sometimes participate in sales meetings, but are careful to respect the company’s strict division between the news and business operations.”
Read more here.
Is Bloomberg snooping different than News Corp. phone hacking?
by Chris Roush
Adam Penenberg, the editor of PandoDaily.com, writes that the revelations that Bloomberg reporters used their terminals to snoop on Wall Street bankers is not much different than News Corp. journalists hacking into people’s phones.
Penenberg writes, “This may not sound like much, but in the hypercompetitive arena of business journalism and the even more secretive world of Wall Street it’s enough to offer a reporter leverage. Last summer, after JPMorgan Chase experienced a multi-billion trading loss, some Bloomberg reporters called the bank to find out whether the traders responsible had been fired. ‘They cited the fact that the traders had gone silent on the terminal,’ the Times reported. Reporters did the same thing with Goldman Sachs, when they sought to find out the fate of one of the firm’s partners. This time, instead of copping silence, which is what Chase did, Goldman complained, and the activities came to light.
“How different is this from News Corp. and its phone hacking scandal? With Bloomberg you have customers paying roughly $20,000 a year per terminal and rely on them to help execute trades with vast sums of money at stake. With the phone hacking scandal you had employees of Rupert Murdoch-owned newspapers accessing voicemails belonging to politicians, celebrities, and the British Royal Family. They also tapped into the phones of relatives of deceased British soldiers, victims of the July 2005 London bombings, and a murdered schoolgirl.
“Hacking voicemail is illegal. In a famous case involving journalism ethics, Cincinnati Enquirer reporter Mike Gallagher hacked into voicemail belonging to executives of Chiquita Banana to help him research a damning story on the company’s labor practices in Latin America. When Chiquita threatened to sue for libel, the paper, owned by Gannet, caved and published a front-page apology for three straight days and renounced the series. Nevertheless, Gannet ended up paying Chiquita $14 million and Gallagher was convicted of unlawful interception of communications and unauthorized access to voice-mail system. Gallagher was sentenced to parole and community service and eventually a judge expunged his conviction
“If you think about it, Bloomberg reporters’ actions were not dissimilar to Gallagher and News Corp.’s. They intercepted information they were not supposed to have and gained unauthorized access to customers’ accounts. The difference: The latter is illegal. The former? It’s hard to say. Plus News Corp. employees also bribed officials to gain access to information, so on the sliminess scale Murdoch wins (or loses, depending on your point of view).”
Read more here. Just to be clear, the Bloomberg reporters did not have access to sensitive personal information about the Wall Street bankers.
