Like, finally, Goldman's getting spied on. "My initial reaction was a bit of schadenfreude. One hedge-fund manager, who wished to remain anonymous, described the Bloomberg practice as "shocking," and he has asked his lawyers to review his agreement with Bloomberg to determine what kind of usage information Bloomberg can access from his fund's terminal.
Meanwhile, the controversy has Wall Street buzzing. While coveted by traders and other professionals as an indispensable tool, the terminal and its ubiquity in the financial sector may turn this into a much bigger headache for Bloomberg, Tabb said. The terminal, with its countless functions, may just serve as a window into Wall Street's second-to-second operations. ( Read More: Fed, Treasury Examining Bloomberg Use of Data)Īt its core, the controversy underscores the paradox of the 32-year-old Bloomberg LP, a privately-held company that is vigilant in not disclosing information about its own finances and operations while generating $8 billion a year in revenue providing and collecting massive amounts of data. The current CEO, Daniel Doctoroff, once a managing partner at private equity firm Oak Hill Capital Partners, told employees in a memo Friday "client trust is our highest priority." As of Saturday night, he had not commented on the breach. Since being elected mayor in 2001, Bloomberg has removed himself from the daily operations of his company. And a decade ago, Swiss banks raised questions about whether certain shared data violated Swiss bank secrecy laws. "That was around the time this kind of access was put in place." Some clients, however, such as European central banks, stipulated that none of their information be shared. "It gave employees a feeling that they had something to do with the clients," the former executive said. The origins of this access may have started first when Bloomberg, as a demanding CEO, mandated that every employee in the company, from sales persons to journalists, call a client once a quarter and ask them if they were having any issues, or needed any help.
Or maybe they are Machiavellian enough that they said let's keep it on until somebody discovers it." "I think they just forgot reporters had this kind of access, until now. "I think this caught (Bloomberg LP) blind-sided because there has been this kind of access for 20 years or so," said one former Bloomberg LP executive, who wished to remain anonymous. Bloomberg has said it has discontinued allowing reporters to access subscriber information. As Bloomberg executives acknowledged the privacy breach as a "mistake" and tried to downplay the controversy, it was still not clear how widespread the practice of peeking into customer terminals was among Bloomberg reporters. ( Read More: Privacy Breach on Bloomberg Terminals)īeyond Wall Street firms, customers of the more than 300,000 leased Bloomberg terminals across the globe include clients as prominent as the Federal Reserve and the Vatican.
That could be an issue." He added he wouldn't be surprised if subscriber agreements would be reworked to ensure more guarantees against breaches, especially as Wall Street firms have beefed up compliance departments and measures. "When you give access to information about when a user is logged in and what they are doing with their terminal, that violates a confidence. "This industry is all about confidentiality," Tabb continued.
"This is going to be a challenge for Bloomberg. "It's pretty surprising that an organization this big has given that kind of open access to user information," said Larry Tabb, founder of Tabb Group, a financial markets research and advisory firm. Goldman Sachs Group and JP Morgan Chase so far have complained about the practice of Bloomberg reporters being able to see when one of their employees is signed on and what kinds of functions they use through keystrokes on the terminal. Since news of the privacy breach broke on Friday, some of Bloomberg LP's biggest customers on Wall Street are re-examining their agreements with the company to see how much information the company can access from desktop terminals, say sources at those firms. It is now in the rare position of having to explain its actions to an industry that puts billions of dollars into its coffers every year. The escalating controversy over Bloomberg reporters accessing private information on Wall Street through the company's terminals puts the data and media empire founded by New York City Mayor Michael Bloomberg into strange, new territory.