Bloomberg Admits Terminal Snooping
Reporters at Bloomberg News were trained to use a function on the company's financial data terminals that allowed them to view subscribers' contact information and, in some cases, monitor login activity in order to advance news coverage, more than half a dozen former employees said.
More than 315,000 Bloomberg subscribers worldwide use the terminals for instant market news, trading information and communication. Reporters at Bloomberg News, a separate division from the terminal business, were nonetheless told to use the terminals to get an edge in the competitive world of financial journalism where every second counts, according to these people, who spoke on the condition of anonymity because of the company's strict nondisclosure agreements.
The company acknowledged that at least one reporter had gained access to information on Goldman Sachs after the bank complained to the company last month. On Sunday, Ty Trippet, a Bloomberg spokesman, said that "reporters would not have been trained to improperly use any client data."
(Read More: Wall Street: How Much Does Bloomberg Know?)
Matthew Winkler, editor in chief of Bloomberg News, underscored that the practice was at one time commonplace. In an editorial published on Bloomberg View late Sunday night, he said the practice of allowing reporters access to limited subscriber information dated back to the inception of the news arm of the giant financial information company founded by Michael R. Bloomberg.
"The recent complaints relate to practices that are almost as old as Bloomberg News," Mr. Winkler said. "Some reporters have used the so-called terminal to obtain, as The Washington Post reported, 'mundane' facts such as logon information."
It was a striking admission from the man who wrote "The Bloomberg Way: A Guide for Reporters and Editors," considered among the quintessential handbooks on ethical business reporting.
In his editorial, Mr. Winkler apologized for the practices that had taken place in the newsroom for decades. "Our clients are right," he said. "Our reporters should not have access to any data considered proprietary. I am sorry they did. The error is inexcusable."
Bloomberg's more than 2,400 journalists go through hours of compulsory training on how to use the superfast data-splicing terminals, and several former employees said that training included informal tips on how to use a function called UUID to locate sources who were also subscribers.
The sheer amount of data available on the terminals created a dynamic in the Bloomberg newsroom in which some reporters favored breaking news over strict subscriber confidentiality, former reporters said.
"There was always a discussion in the newsroom of how to use the terminals to break news," said one former Bloomberg journalist. "That's where it gets nuanced because I'm sure that in encouraging people to break news, Matt did not mean in this way," this person added, referring to Mr. Winkler.
On Friday, Mr. Winkler reminded reporters of the company's policy that prohibits journalists from discussing nonpublic Bloomberg documents and proprietary information about the company and its clients in their reporting. Last month, he contacted Goldman Sachs to apologize after the bank had complained about the reporting technique.
Bloomberg reporters also are accused of monitoring JPMorgan Chase executives' login information last summer, when the bank suffered a multibillion-dollar trading loss, according to people briefed on the situation. The bank never formally complained to Bloomberg representatives about the practice.
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The Federal Reserve and Treasury Department are also investigating whether reporters tracked employees. Bloomberg terminals sit in the highest echelons of power — including central banks, rival news organizations, Congress and even the Vatican.
Daniel L. Doctoroff, chief executive of Bloomberg L.P., said that making limited customer data available to reporters was a "mistake" and that it would not happen again. The company said the functions that led to the controversy had been disabled in the newsroom last month. The company also appointed a senior executive to the newly created role of client data compliance officer. (Mr. Bloomberg stepped back from the company's day-to-day operations when he became mayor of New York.)
(Read More: Privacy Breach on Bloomberg Terminals)
Bloomberg executives have not denied that they knew some reporters turned to the terminals to monitor when subscribers, who are mostly traders and finance executives, had logged on. On less frequent occasions, reporters also monitored chats between those subscribers and customer service representatives. Reporters could not see a subscriber's specific securities, trades or which news articles they had read.
Mr. Winkler did not expand on who may have been affected. He said the practices were a legacy left over from when reporters were considered part of the sales operation. Nearly 85 percent of the company's $7.9 billion in 2012 revenue came from its terminal business.
The news operation was assembled in the 1990s primarily as a way to sell more terminals. Reporters regularly accompanied sales representatives to sell subscribers on the wonders of the terminal, the desktop computers that provide a constant stream of headlines and data and sit upon many traders' desks.
The company has said the close relationship between journalists and the sales team meant there was a reason to allow reporters access to limited subscriber data to help with customer service and to customize news to subscribers' needs.
The UUID function at the center of the current controversy provided background on an individual subscriber, including contact information, and when the subscriber had last logged on. An internal Bloomberg review conducted after Goldman Sachs complained last month that a reporter had inquired about a partner's employment status after tracking the executive on UUID, revealed that "several hundred" reporters had used the technique. Mr. Trippet, the company spokesman, said no reporters had been fired.
In 2011, Erik Schatzker, a host of Bloomberg Television's "Market Makers" show, said on the broadcast that he had used a terminal subscriber's data to report on a finance executive. The episode set off concerns inside the newsroom.
After Mr. Schatzker made the remarks, which were first reported by BuzzFeed on Saturday, Bloomberg conducted an internal review. Executives thought the terminal functions that allowed reporters to see subscriber data had been disabled, said one person briefed on the review.
On Friday, Mr. Doctoroff also tried to ease subscribers' concerns. "Reporters only have access to the same customer relationship data available to our clients," he said, adding, "Client trust is our highest priority."
_ By Amy Chozick, The New York Times
(Disclosure: Bloomberg is a competitor of CNBC in reporting and distributing business news on the Web and on television.)