March 31, 2023

Bloomberg Admits Terminal Snooping

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.”

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.

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.)

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Today’s Economist: Nancy Folbre: The Year of the Cooperative

Nancy Folbre, economist at the University of Massachusetts, Amherst.

Nancy Folbre is an economics professor at the University of Massachusetts, Amherst. She recently edited and contributed to “For Love and Money: Care Provision in the United States.

We live in a competitive world. Yet much of our competition is team-based, requiring cooperation among team members. The biologist Edward O. Wilson describes the resulting tensions as a central dilemma facing all social species – humans as well as ants.

Today’s Economist

Perspectives from expert contributors.

Economists haven’t quite caught up with the implications. Further, they haven’t quite caught on to the reality that cooperative enterprises play an enormously important role in our economic system, one that is likely to grow in decades to come.

Whether set up as worker-owned businesses, consumer memberships, financial institutions or marketing/distribution networks, co-ops pursue more complex goals than maximizing profit. They often put a high priority on democracy, education and the sustainable development of their communities.

Since 1930, cooperative enthusiasts have proclaimed October National Cooperative Month to help publicize their efforts. This year, the United Nations proclaimed the International Year of Cooperatives. The month that begins today promises a grand cooperative convergence, with a number of important events scheduled worldwide.

From Oct. 6 to 11, the city of Quebec will play host to an International Summit of Cooperatives, informally described as the “Davos of the Cooperative Movement,” a reference to the annual gathering of the global elite officially known as the World Economic Forum in Davos, Switzerland.

In 2011, the membership and entrance fee for the Davos meeting was $71,000. Registration for the 2012 International Summit on Cooperatives is $1,300. The conference program reveals a lineup clearly aimed at the international business community. The list of sponsors is topped by the Canadian government and features many big names, including Microsoft, I.B.M., Google, McKinsey, Ernst Young and Deloitte.

The summit Web site challenges the common assumption that co-ops can’t grow out of small neighborhood niches, contending that the 300 largest cooperatives worldwide (including the famous worker-owned Spanish manufacturing concern Mondragon) generate total revenue equal to $1.6 trillion, “an economic power equivalent to the world’s ninth-largest economy in 2008.”

The summit also offers a cooperative leadership training program, particularly significant since most business/management programs give this topic short shrift. The only institution in North America offering a master’s of management specifically for cooperatives and credit unions is St. Mary’s University in Halifax, Nova Scotia.

Cooperative businesses seem to be expanding, perhaps because of disillusionment with more conventional business models and growing interest in a more do-it-yourself economy.

Whether they ever become a significant competitive threat to the Davos elite, cooperatives are likely to remain a mainstay of global food production. The United Nations Food and Agriculture Organization, sponsoring more October celebrations, notes that agricultural cooperatives account for a large share of dairy, coffee and cotton production in several countries.

Even in the United States, known for its huge agribusiness corporations, cooperatives account for 80 percent of dairy production. And they are moving into the ice cream sector.

In 1999, several former Baskin-Robbins franchisees who were cut loose by the parent company decided to form their own franchise operation, the Texas-based KaleidoScoops cooperative. They offer their owner-members relatively low start-up costs along with the opportunity to shape company policy.

I e-mailed them last week to ask how they plan to celebrate National Cooperative Month. Greg Ziolkowski, the president, reported that they are planning a members’ convention in Dallas to go over financials, marketing plans and new ideas.

Cooperatively scooped ice cream seems like an idea that should make both humans and ants very happy. I hope they’ll be scooping some at the international summit.

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You’re the Boss: Waiting for a Recovery

Thinking Entrepreneur

An owner’s dispatches from the front lines.

I have been selling a very popular poster in my frame shop over the last few months. It is a reproduction of a recently rediscovered poster that was printed in England before World War II, but was never distributed. It says “Keep Calm and Carry On,” and it has become quite popular all over the world. I think it’s good advice for dealing with fear, especially for small-business owners.

When I started my business right out of college, I had a lot of fears: of not having enough sales, of signing a lease, of having made a bad career choice. As the business has grown, I have learned that there are many other things to fear: cash flow problems, bad receivables, embezzlement, employee lawsuits, government offices, recessions, accidents and product liability, to name a few. That’s the bad news. The good news, to paraphrase Neitzsche, is that what doesn’t kill us makes us stronger.

Fear is not all bad. It keeps us on our toes. But it also puts people out of business who can’t or won’t make tough choices. I have seen many once-successful companies go broke. Companies go out of business for all sorts of reasons, but there are times, perhaps like now, when it is tempting to become very conservative, when it can seem too dangerous to take the risk of spending money to improve your business. Sometimes, though, in a competitive world, being overly conservative can prove as dangerous as being reckless.

Three years ago, many business owners were afraid they wouldn’t be able to pay their bills and weather the storm. Today, many of us fear that the storm has done too much collateral damage, and things are not going back to the way they were. I talk to many people in business who are still waiting for a recovery, and they are starting to look at their businesses in a different light. They don’t know if they are more afraid of doing nothing or of doing the wrong thing. They’ve never been through anything like this — who has? But difficult times can create interesting opportunities.

My plan for 2009 was to get to 2010. Mission accomplished. At some point, knowing there can be opportunities in a bad economy, I got back to looking for ways to improve my businesses. I bought a new building. It meant laying out a lot of cash at a time when that wasn’t easy. While it’s a much better facility, on a cash-flow basis, I’ve had to put a lot of money into it. One thing I’ve learned: when you buy a big building — this one is 85,000 square feet — you buy a big roof. Mine leaked. It cost a lot to fix.

My home furnishings store has been doing more and more business on the Web, so I seized the opportunity to redo its Web site. Again, I have no doubt the investment will pay off — eventually. I also started manufacturing a new line of photo frames, and I took out a booth at a gift show in Atlanta this month to introduce them. We did about a tenth of the business we expected, but we learned some things.

It was the first time we had gone to this show, and we didn’t have realistic expectations. Next time, we will go to the New York show instead; our frames are better suited for a more contemporary market. Am I afraid that the new line isn’t going to work? No. We went to the wrong show at the wrong time. I have gotten pretty good at determining when something can be fixed and when I am being delusional. This can be fixed. But I’m not sure how many more opportunities I can afford to seize before the economy turns.

There comes a time in business that you don’t look down, you don’t look back, and you just move forward. Am I where I wanted to be at this time? No. But I still believe that my recent investments will pay off. The results are not going to show up on this year’s financials, but I’m confident that in the long run, I’ll be better off than I was before the melt down.

Again, whatever doesn’t kill you …

9:40 a.m. | Correction A previous version of this post misstated the message in the British poster. (Thanks to the commenters who pointed out the error.)

Jay Goltz owns five small businesses in Chicago.

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Letters: Executive Pay, Revisited

Executive Pay, Revisited

To the Editor:

Re “We Knew They Got Raises. But This?” (July 3), which offered updated figures on executive pay packages for 2010:

Having spent my entire working career in the elementary classroom, I know little about the business world other than what I read in the newspaper. Still, I must wonder whether any C.E.O.’s are worth the pay and bonuses they receive. Sure, in the competitive world of business, a skilled executive should draw more than those who work for him or her, but why do the awards have to be so astronomical?

As a retired California teacher, my pension is modest. Yet I have no complaints: this monthly retirement pay allows me to pay the rent, put food on the table. As skilled as C.E.O.’s must be in management, I wonder if any of them could manage a class of 32 active third graders, keep order, promote learning, teach how to behave and treat others fairly while maintaining his or her sanity in front of the class? Barney Scott

Spring Valley, Calif., July 3


To the Editor:

There is a simple solution to the problem of executive pay that would also help balance the federal budget.

Not that long before Reaganomics, the highest income tax rate in the United States was in the area of 90 percent. If we now instituted a top rate of, say, 75 to 80 percent, adjusted downward for lower earners, we would not only raise badly needed government revenue but would also put an end to excessive executive pay.

Why? No corporate board would approve disproportionately high compensation while knowing that most of the money would go to the I.R.S. Corporate managers would consider that wasteful — such is the psychology of many of the wealthy.

Runaway executive pay inflation is a fairly recent phenomenon, born of irresponsible tax cuts. Sound tax policy effectively curbs excesses while creating a prosperous society through public benefits.

Gretchen Kaapcke

Santa Fe, N.M., July 4

To the Editor:

My daughter just completed four years of college, graduating with honors. She is one of many graduates seeking employment in this difficult economy. I wonder if any of these extremely well-paid executives would consider giving up some $1 million or $2 million of their pay packages and creating a few entry-level jobs for these young people needing a break.

Such amounts from the executives’ huge paychecks would surely not be missed. Cheryl Williams

Manila, July 4


To the Editor:

According to the theory of trickle-down economics, all of those at the bottom of the economic ladder now have something to cheer about: the steep climb in the pay of our high-end corporate leaders.

Those executives had a median pay gain of 23 percent in 2010, so if the trickle-down idea works, there will surely be plenty to trickle down to all of us. Or, instead, has our economic system evolved from a shared-wealth society into one that benefits the few at the top, while the rest, including many recent public employees, are humiliated by having their pensions, health care benefits, and salaries reduced or frozen by government edict? Morris Roth

Fort Lee, N.J., July 3

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