In a continuing effort to address concerns that reporters at Bloomberg L.P.’s news division looked at terminal subscribers’ data, the company on Friday appointed Samuel J. Palmisano, the former chairman and chief executive of I.B.M., to review its privacy and data standards.
Mr. Palmisano, who joined I.B.M. in 1973 and served as chief executive until 2011, will report to Bloomberg’s board and will initiate a review of the company’s handling of its vast troves of subscriber data and how that data is used internally. He sits on the board of Bloomberg Philanthropies, the cheritable group of Michael R. Bloomberg, who founded Bloomberg L.P.
The appointment follows reports that Goldman Sachs executives complained to Bloomberg L.P. that a Bloomberg News reporter monitored terminal logon information for one of the firm’s partners to investigate his employment status.
Bloomberg leases its high-speed financial data-splicing terminals for about $20,000 a year; with that cost comes presumed assurance that subscribers’ financial data and chat conversations that take place on the terminals are kept private. Instead, some Bloomberg reporters had used a terminal function, now disabled, to find a subscriber’s personal contact information, to monitor whether a subscriber was logged on and to read chats between subscribers and customer service. Reporters could not see specific securities or trades.
The Goldman Sachs complaint set off a wave of inquiries from subscribers on Wall Street, including JPMorgan Chase, Bank of America and Deutsche Bank, and in government, including the Federal Reserve, the Treasury Department and the European Central Bank.
In addition to announcing the new appointment, Bloomberg also said on Friday that Clark Hoyt, an editor at large at Bloomberg News and a former public editor at The New York Times, would conduct a review of the news division’s relationship with the terminal business. That job will include assessing how subscriber data is handled and if necessary, formulating new rules. Mr. Hoyt will report to Daniel L. Doctoroff, chief executive of Bloomberg L.P.
“The review will be completed expeditiously, thoughtfully and thoroughly,” Mr. Doctoroff said in a statement. Last week, Bloomberg said it had appointed Steve Ross, a senior executive, to the newly created position of client data compliance officer.
In a statement, James P. Gorman, the chairman and chief executive of Morgan Stanley, said, “The appointments Bloomberg announced today show that they are taking the right steps to maintain the confidence of their customers. They have been very open and proactive in terms of outreach, communication and dialogue with our firm.”
The Bloomberg board has also hired the law firm Hogan Lovells and the Promontory Financial Group to assist in the review. The company, founded by Mr. Bloomberg in 1982, has over 315,000 terminal subscribers generating about 85 percent of its $7.9 billion in revenue in 2012.
Although some subscribers praised Bloomberg’s hiring of outside advisory groups, additional question may arise about the independence of the newly named advisers, Mr. Palmisano is a close friend of Mr. Bloomberg’s, and Promontory has faced scrutiny from Congress over its heft on Wall Street and influence in Washington. (Promontory has said the firm remains independent by reporting to a company’s board rather than its management.)
Peter T. Grauer, chairman of the Bloomberg board, said it was “committed to getting the best possible advice from experts with impeccable reputations in their respective fields.”
Article source: http://www.nytimes.com/2013/05/18/business/media/bloomberg-lp-names-overseer-of-privacy-standards.html?partner=rss&emc=rss