Bloomberg Reporters’ Practices Become Crucial Issue for Company

“The only journalism that matters is the kind that moves markets,” Mr. Secunda told the senior staff of Bloomberg News during a recent discussion in the seventh-floor auditorium of the company’s Lexington Avenue headquarters, according to one former Bloomberg journalist in attendance.

The question of how exactly some of those Bloomberg reporters may have uncovered market-moving information has become a critical one for the company.

In April, Goldman Sachs complained that a reporter had monitored an executive’s activities on the Bloomberg machine, the ubiquitous financial terminal that contains a mind-boggling array of information about economies, companies, markets and people, including Bloomberg’s own customers. The revelation prompted inquiries from more than 20 customers, including Bank of America, the Federal Reserve, the Treasury Department and the European Central Bank. Daniel L. Doctoroff, chief executive of Bloomberg, apologized, calling the reporting practice a “mistake.”

But interviews with more than 30 current and former Bloomberg employees paint a picture of an aggressive, hyperkinetic organization that not only tolerated but encouraged an unusual symbiotic relationship between the company’s news operation and its business interests, including the use of the terminals to break news.

Many of these reporters say they routinely used the terminal’s function, called the UUID command, to find background information on subscribers, including contact information, when the subscriber had last logged on, and weekly statistics on how often customers used a particular function, like equity shares or currency markets.

Reporters also say they talked to their business-side colleagues to gain early access to company announcements, including company releases and bond prospectuses about to be made public, and queried Bloomberg’s own help desk to find out what pages and features customers might have been using.

“We were told again and again and again, find ways to use what’s on the terminal to write stories,” said one former Bloomberg reporter who, like most employees, was required to sign a strict nondisclosure agreement that prohibits them from speaking about the company. “They never said ‘Oh, please be careful and don’t breach any kind of privacy,’ ” the former reporter said.

A senior Bloomberg executive not authorized to speak for attribution confirmed the reporter’s account. “It’s not like this was some deep Bloomberg secret,” this executive said. “If it’s on the terminal, we’d say go for it.”

In the opaque world of Wall Street where traders tightly protect every shred of information, the privacy breach threatens to undermine Bloomberg’s core terminal business — which takes up 26 floors at Bloomberg’s New York headquarters, compared with four floors for the news unit. Bloomberg leases more than 315,000 of its roughly $20,000-a-year financial data computers, which made up 85 percent of the company’s 2012 revenue of $7.9 billion.

After Goldman complained, Bloomberg immediately shut newsroom access to the UUID function. Mr. Doctoroff promised an independent inquiry to be led by Samuel J. Palmisano, the former chairman and chief executive of I.B.M., who is a board member of Mr. Bloomberg’s charitable group. Mr. Doctoroff also appointed a senior executive to the newly created Bloomberg position of client data compliance officer.

Although Bloomberg has acted swiftly, several people close to the company said executives considered the controversy overblown, fanned by Wall Street banks frustrated with aggressive news coverage and eager to negotiate cheaper rates for terminals. Bloomberg controls more than a third of the $25.5 billion financial data services market, according to Burton-Taylor International Consulting.

Competitors have already pounced. At an investor conference on May 28, Lex Fenwick, chief executive of Dow Jones Company, publisher of The Wall Street Journal, and former chief executive of Bloomberg L.P. introduced a Dow Jones messaging system which, he said, would be “strictly stored on your servers and we can’t see what you’re saying to each other.”

Yvonne Diaz, a spokeswomen for Thomson Reuters, said “there are strict controls in place that prevent any Reuters or other staff outside of the development and customer service groups from accessing” customer data. But in a sign of just how competitive the market for financial news and analytics has become, Thomson Reuters allows a tier of select clients early access, by two seconds, to consumer sentiment data through an agreement with the University of Michigan. The unusual arrangement was first reported by CNBC.

Article source: http://www.nytimes.com/2013/06/14/business/media/bloomberg-reporters-tactics-become-crucial-issue-for-company.html?partner=rss&emc=rss