Bloomberg LP raced to reassure clients after a rare misstep that placed the data-and-media giant on the wrong side of Wall Street’s zeal for controlling information.
Two of the firm’s leaders – chief executive officer Daniel Doctoroff and Matthew Winkler, editor-in-chief of Bloomberg News – have acknowledged that the company blundered by allowing its journalists to see certain information about customers, such as when they last logged in to Bloomberg’s data system.
“Our reporters should not have access to any data considered proprietary,” Mr. Winkler wrote in an opinion piece posted early Monday. “I am sorry they did. The error is inexcusable.”
The episode highlights potential pitfalls for all manner of companies seeking to capitalize on the information they gather without alienating their clients.
Bloomberg’s customers – major banks, hedge funds, asset managers and regulators – are more obsessed with secrecy than most. They pay $20,000 (U.S.) a year per computer terminal to access Bloomberg’s wealth of financial data and its proprietary tools for analyzing it.
The issue came to light after Goldman Sachs Group Inc. complained to Bloomberg that one of its reporters had asked whether an employee had left the bank or been dismissed. The clue? The reporter could see that some time had passed since the employee in question had logged into the Bloomberg system – a move akin to punching a time clock in the financial industry.
Last month, Bloomberg closed the loophole so that its reporters can see only what its clients do. But the questions from customers remain.
The European Central Bank and the U.S. Federal Reserve Board have discussed the situation with the company, according to the Financial Times.
The Bank of Canada has also been in contact with Bloomberg about the issue, according to a spokesperson, who declined to comment further.
For any news organization, “it’s always important to keep this separation of church and state,” said Douglas Taylor of Burton-Taylor International Consulting LLC, which specializes in the financial-data industry. “Clearly Bloomberg crossed the line here and probably immediately recognized it.”
Several diehard Bloomberg users said the issue wouldn’t have an impact on the way they employ the terminal or view the company. “My general sense is people are blowing this out of proportion,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.
However, he added that he was slightly troubled by reports that this tension had surfaced back in 2011 but the firm did not correct it until recently. A spokesman for Bloomberg did not respond to a query about when the firm became aware of customer concerns over what its journalists could see.
Bankers and traders on Bay Street have been following the situation, but it hasn’t caused a major stir or changed the way people do their jobs. Spokespeople at Royal Bank of Canada and Canadian Imperial Bank of Commerce said on Monday that it was business as usual at their organizations.
The situation is an unusual one for Bloomberg, which rarely makes headlines except of its own volition. Founded by Michael Bloomberg in 1982, the firm grew into a global juggernaut that overturned old ways of doing business in everything from bond trading to financial journalism. (Since Mr. Bloomberg became Mayor of New York City in 2002, he has not been closely involved in the company’s operations.)
Bloomberg started out as a data operation; the news division sprang up eight years later as a way to support the primary business of selling terminals.
Until last month, its 2,400 reporters could see a user’s login history and any interactions with the help desk. They could also see what broad types of functions any given user was employing.
“This is akin to being able to see how many times someone used Microsoft Word vs. Excel,” Mr. Winkler wrote in his opinion piece.
They could not, however, see any specific securities or analytical tools used by individual customers.
Some in the financial industry said the episode touched on much larger questions about how personal data is used. “Many people on Wall Street think that the government is Big Brother,” said Mr. Chandler of Brown Brothers Harriman. “Big business is Big Brother.”
With files from reporter Tim Kiladze in Toronto.