Tag Archives: Ethics
Bloomberg customers now re-examining contracts
by Chris Roush
Some of Bloomberg LP‘s biggest customers on Wall Street are re-examining their agreements with the financial data and news company to see how much information Bloomberg employees can access from desktop terminals, reports Tom Lowry of CNBC.
Lowry writes, “At its core, the controversy underscores the paradox of the 32-year-old Bloomberg LP, a privately-held company that is vigilant in not disclosing information about its own finances and operations while generating $8 billion a year in revenue providing and collecting massive amounts of data. The terminal, with its countless functions, may just serve as a window into Wall Street’s second-to-second operations. While coveted by traders and other professionals as an indispensable tool, the terminal and its ubiquity in the financial sector may turn this into a much bigger headache for Bloomberg, Tabb said.
“Meanwhile, the controversy has Wall Street buzzing. One hedge-fund manager, who wished to remain anonymous, described the Bloomberg practice as ‘shocking,’ and he has asked his lawyers to review his agreement with Bloomberg to determine what kind of usage information Bloomberg can access from his fund’s terminal. ‘My initial reaction was a bit of schadenfreude. Like, finally, Goldman’s getting spied on. But then I realized, while it’s fine to spy on Goldman, they could be spying on me,’ he said.
“A source at JPMorgan Chase, who also wished to remain anonymous, said that several Bloomberg reporters have used data about when traders at the firm log into their terminals as the basis for stories about the bank. ‘They were quite open about it. They’d say, ‘We see your Whale trader hasn’t logged in three days. Has he been fired?” the person said. Bloomberg reporters once asked if JPMorgan was pulling back in a certain market segment based on the fact that several traders in that area had not been logging in regularly.
“‘They were trying to figure out our strategy based on who was logging in. That was disturbing,’ the person said. JPMorgan complained to the reporters involved but did not raise the issue with Bloomberg executives.”
Read more here.
Bloomberg knew about reporters tracking clients in 2011
by Chris Roush
Executives at Bloomberg LP have known about journalists using the company’s terminals to spy on clients at least since September 2011, reports Peter Lauria of BuzzFeed.
Lauria reports, “That month, Erik Schatzker, an anchor at Bloomberg TV and host of ‘Market Makers,’ was reprimanded for making on-air comments about using terminal data to track the activities of at least one story subject, according to two sources with knowledge of the situation.
“One source said the matter was a very big deal internally but was handled quietly.
“‘All the terminal guys freaked out,’ said this source, referring to Bloomberg’s army of salespeople who sell its $20,000 signature product. Bloomberg’s 315,000 terminal subscribers, not its news operation, make up the vast majority of its revenue, which last year totaled $7.9 billion.
“Schatzker declined comment, as did a Bloomberg representative, and a clip of Schatzker making the comment couldn’t immediately be located.
“Though no one outside Bloomberg’s Manhattan headquarters complained about Schatzker’s slip, executives at the time said they would disable the function that allowed journalists to access certain client data, said one source.”
Read more here. The practice of Bloomberg journalists tracking client information on the terminals has been criticized in recent weeks by some Wall Street banks, and Bloomberg has now blocked that information from its editorial staff.
Fed, Treasury examining Bloomberg terminal use by reporters
by Chris Roush
Both the Federal Reserve and the US Treasury Department are examining the extent to which Bloomberg-terminal usage by top officials might have been tracked by Bloomberg journalists, CNBC has learned.
Steve Liesman of CNBC reports, “A Fed spokesperson told CNBC that the central bank is looking into the situation and has been in touch with Bloomberg to learn more. A source said the Treasury Department is taking similar action.
“Meanwhile, CNBC has learned from a former Bloomberg employee that he accessed usage information of the company’s data terminals of Federal Reserve Chairman Ben Bernanke and former U.S. Treasury Secretary Tim Geithner.
“The information appeared to concern general functions used by the officials and the frequency with which those functions — such as looking at a bond, equity markets or news — were accessed. The source said all Bloomberg journalists who knew of this capability of the terminal would have had access to the usage information of the officials. However, CNBC has no information that the data were either used by the employees for journalism or shared inappropriately.
“In response to queries that Bloomberg journalists had access to officials data usage, a Bloomberg spokesman said, ‘What you are reporting is untrue’ but declined to respond when asked what specifically was inaccurate. He also would not say whether the company had investigated journalists’ access to this information.”
Read more here.
Bloomberg CEO: Journalist access to data was a mistake
by Chris Roush
The following email that was sent to all Bloomberg LP employees globally by Daniel L. Doctoroff, CEO and president:
Since our founding more than 30 years ago, the proper safeguarding of customer data has been a central tenet of Bloomberg’s culture.
A Bloomberg client recently raised a concern that Bloomberg News reporters had access to limited customer relationship management data through their use of the Bloomberg terminal. Although we have long made limited customer relationship data available to our journalists, we realize this was a mistake.
Having recognized this mistake, we took immediate action. Last month we changed our policy so that all reporters only have access to the same customer relationship data available to our clients. Additionally, we decided to further centralize our data security efforts by appointing Steve Ross, one of our most senior executives, to the new position of Client Data Compliance Officer. Steve is responsible for reviewing and, if necessary, enhancing protocols which among other things will continue to ensure that our news operations never have access to confidential customer data.
To be clear, the limited customer relationship data previously available to our reporters never included access to our trading, portfolio, monitor, blotter or other related systems or our clients’ messages. Moreover, reporters could not see news stories that clients read, or the securities they viewed. Bloomberg has very strict data security policies in place, in addition to significant and rigorous training, processes and protocols. Upon hiring, all Bloomberg employees enter into confidentiality provisions, including Bloomberg News.
Client trust is our highest priority and the cornerstone of our business, and we are deeply committed to ensuring the complete integrity and confidentiality of our clients’ data in all situations and at all times.
Bloomberg reporters also snooped on JP Morgan employees
by Chris Roush
Julia LaRoche of Business Insider is reporting that Bloomberg News reporters also used the company’s terminal to glean important information about the actions of JP Morgan bankers during its London Whale trading losses last year.
Bloomberg has come under criticism from Goldman Sachs recently and has agreed to limit with its editorial staffers can see on the terminals.
LaRoche writes, “According to a JP Morgan source, Bloomberg reporters would call JPMorgan CIO traders on their home phone numbers or personal cellphones and say, ‘Hey, I noticed you haven’t used your Bloomberg Terminal in a while are you still with the bank?’
“Bankers at JPMorgan expressed frustration with this to multiple Bloomberg reporters, a source said.
“The source also said that this has happened in broader instances at JP Morgan and not just with the ‘London Whale’ traders. But the ‘London Whale’ event is when it became apparent to JP Morgan that Bloomberg reporters were using their private client information to spy on them.
“‘They were pretty blatant about saying they noticed if you haven’t logged into your Bloomberg or you haven’t been trading in a while,’ a JPMorgan source said.
“The general sense is that the behavior of these Bloomberg News reporters was outrageous.
“As one JP Morgan source said, when you buy a Bloomberg Terminal, ‘You don’t think someone’s tracking your every move.’”
“If you’re not already familiar with the Bloomberg Terminal, it’s basically a computer that’s targeted toward financial professionals so they can message other users, obtain real-time market data, news, stock quotes among many other functions.”
Snooping on your customers, the Bloomberg way
by Chris Roush
Tracy Alloway of the Financial Times, a former Bloomberg News staffer,writes about how reporters at the news service used the terminal to find out info about people on their beats.
Alloway writes, “What is more surprising is the fact that this has never come to light before. Ex-Bloomberg employees (this Alphaville contributor included) have been aware of the power of UUID for a long time. It’s only one of the, erm, ‘informational advantages’ that comes from working at Bloomberg. Another prominent one being the internal database reporters are required to contribute to on a regular basis. That database includes personal contact details of their sources – readily accessible to other Bloomberg employees – as well as personal details such as the names of their children, favourite foods and hobbies.
“Needless to say, there is an obvious conflict here. Bloomberg has built a semi-monopoly when it comes to financial terminals. Some of that success, it must be noted, comes from this kind of data-mining of users’ information
“UUID is a commercial function intended for sales people who can go to the client and say; ‘We see you like this function and are interested in this subject. Perhaps you would also enjoy these functions and features.’
“But the blurring of the commercial side with Bloomberg’s well-respected newswire, is a problem.”
Read more here.
Goldman Sachs confronts Bloomberg about reporter snooping
by Chris Roush
Goldman Sachs brass recently confronted Bloomberg LP due to concerns reporters at the business news service have been using the company’s ubiquitous terminals to keep tabs on some employees of the Wall Street bank, reports Mark De Cambre of the New York Post.
De Cambre writes, “A Goldman spokesman confirmed that Bloomberg was taking steps to address the issue.
“No reporters have lost their jobs as a result of the snooping issues.
“Bloomberg reporters’ ability to access the special so-called customer relationship management (CRM) information features was a holdover from that ’90s era when reporters also worked with the news organizations sales efforts.
“‘Limited customer relationship data has long been available to our journalists, and has never included clients’ security-level data, position data, trading data or messages,’ said Bloomberg spokesman Ty Trippet.
“‘In light of [Goldman’s] concern as well as a general heightened sensitivity to data access, we decided to disable journalist access to this customer relationship information for all clients,’ he noted.”
Read more here.
WSJ names editors to oversee ethics, standards
by Chris Roush
Wall Street Journal managing editor Gerard Baker sent out the following editor appointmsnts Thursday afternoon:
An unshakeable commitment to the strictest ethics and the highest values is at the core of our journalism. Everything we do at Dow Jones is underpinned by our striving to meet the most elevated standards of reporting and editing. It is the foundation of the trust our readers place in us.
As we complete the integration of the Journal and Newswires we place renewed emphasis on those standards. We will shortly be a fully integrated newsroom that produces thousands of headlines, articles, blog posts, comments, tweets, videos and other journalistic articulations a day. As we have noted, this is an unmatched opportunity to extend and enhance our content. But it also requires us to be ever more vigilant in enforcing our standards.
Today I am delighted to announce that Neal Lipschutz will lead these efforts. He becomes Editor, Ethics, overseeing ethics and standards for The Wall Street Journal and all of Dow Jones. He will be the arbiter on all standards and ethics issues. Neal will report to me.
Karen Miller Pensiero is named Editor, Newsroom Standards. Karen will oversee our final reading and journalism standards and ethics, among other areas. She also will continue to oversee standards and ethics training for the global news group. Karen will report to Neal.
Neal has been a linchpin of Dow Jones journalism for more than three decades. He embodies the very spirit of our values and standards. He joined the company in 1982 as a national copy reader for Dow Jones Capital Markets Report. He has held a series of news management positions for what was the stand-alone Dow Jones Newswires news team. He was named to his current role of Newswires managing editor in 2005. Neal received a 2011 Best in Business award from the Society of American Business Editors and Writers for his columns for Dow Jones Newswires.
Karen is among the most trusted and experienced editors we have. She joined Dow Jones in 1984 as an intern and then in 1985 as a copy editor at The Wall Street Journal Europe in Brussels, where she later was Money & Markets Editor. She moved to New York in 1990 to create the Overseas Copy Desk, and has held a variety of corporate positions, including director of corporate communications and director of Dow Jones Interactive Publishing International. She rejoined the news department in 2004 to bolster its standards and ethics team.
With Neal’s appointment, the title of Managing Editor, Dow Jones Newswires, is retired. I will be appointing a new editor to oversee the newswires products. But this change should be read as the ultimate statement of our commitment to creating a single news organization. Newswires now no longer has a separate reporting and managerial structure; it is, instead, a central part of a single, harmonized, global newsroom.
Please join me in congratulating Neal and Karen on their new roles.
Scoops about lawmaker impact of investments is nothing new
by Chris Roush
Jack Shafer of Reuters writes about the folly of those who are now investigating how a political intelligence group was able to report to its clients about new Medicare policy, allowing its customers to buy up publicly traded health care stocks before others got the news.
Shafer writes, “Obscure, untraceable people talking to people they know or don’t know, gathering information from congressional or agency sources, asking questions that appear to be innocent but turn out to be valuable to businessmen. Say, doesn’t that sound a lot like what the financial press does every nanosecond of every minute of every hour around the world? Isn’t this what we call … journalism, as practiced by the reporters at the Wall Street Journal, Reuters, Bloomberg, the Financial Times, CQ, financial newsletters, CNBC, Fortune, Businessweek, business news sites and elsewhere? Not to mention the pricey financial information vended through the Bloomberg terminal or from my mother company, Thomson Reuters.
“Bloomberg View columnist Jonathan Weil arrived at a similar conclusion in early April as the ‘scandal’ was just revealing itself, describing the 75-word note Height Securities analyst Justin Simon sent to his company’s clients as an’“amazing scoop.’
“‘Maybe someone told Simon something without permission, but that wouldn’t be the analyst’s problem,’ wrote Weil. ‘Journalists get stories all the time by sweet-talking people into blabbing things they shouldn’t. There’s nothing wrong with that.’
“There’s been nothing wrong with it for five or six centuries, as Chris Roush’s 2006 history of business journalism, Profits and Losses: Business Journalism and Its Role in Society, informs us. The earliest business journalism from the 15th and 16th centuries pushed both financial data and political intelligence to readers, Roush writes. Acting quickly on government news has always been lucrative, he points out in an interview, citing a favorite historical example: Treasury Secretary Alexander Hamilton’s January 1790 decision to reorganize the young country’s debt and ‘refund the existing debt at face value,’ as he words it in his book. Informed investors boarded ships bound for Southern states to beat the news trickling down by land. Once they arrived in Georgia, South Carolina and North Carolina, they reaped windfall profits by purchasing debt at 10 percent to 20 percent of face value from the unsuspecting. Roush shrugs his shoulders at the Height Securities story. ‘This is nothing new, this is using information to make money in the market,’ he told me.”
Read more here.
How the 2008 crisis impacted financial journalism
by Chris Roush
Last week, ProPublica and NYU’s Arthur L. Carter Journalism Institute hosted a discussion on the 2008 financial crisis and how, if at all, it impacted our panel of top Wall Street journalists – both their outlook and their work.
The discussion included Jesse Eisinger, ProPublica; Chrystia Freeland, Reuters; James B. Stewart, New York Times; and Megan McArdle, Newsweek/Daily Beast. It was moderated by Felix Salmon of Reuters.
