Wall Street traders and financial institutions aren't safe from the perils of Internet snooping. Reporters at the financial publication Bloomberg were allegedly found spying on major financial institutions through the company's proprietary data terminals in order to break news for years.
The practice helped hundreds of Bloomberg reporters to understand the motivations behind trader decisions, and allowed reporters to track any given subscriber's actions, from reading newswires to bond trades, through keystrokes.
"This industry is all about confidentiality," financial advisory Larry Tabb said to CNBC. "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. That could be an issue."
The news broke in a May 10 article by The New York Post, after a Bloomberg reporter inquired on the employment status of a Goldman Sachs employee, noting the employee hadn't logged into his Bloomberg terminal for some time. Goldman Sachs complained about the intrusion to The Post, causing Bloomberg executives admitted to the practice.
Bloomberg apologized for the privacy-breaching practices, but the admission of such news has raised serious questions about the ethics of both the financial publication and data company. The U.S. Treasury and Federal Reserve, also Bloomberg terminal customers, are considering an investigation to see if the breeches resulted in leaks of confidential information.
But, as The New York Times reports, Bloomberg's culture of competitiveness may be partly to blame for the intrusions. Bloomberg reporters are given access to terminals and are encouraged to use them in any way to report on their beats. Reporters would use a terminal's "Z function" to view a list subscribers at a firm, and could then look up the information and terminal history of anyone on the subscriber list.
"Although we have long made limited customer-relationship data available to our journalists, we realize this was a mistake," Bloomberg Chief Executive Officer Dan Doctoroff wrote to employees in a company-wide email and published by competitor AllThingsD. " Last month we changed our policy so that all reporters only have access to the same customer relationship data available to our clients."
As a consequence of the leak, Bloomberg appointed senior executive Steve Ross to client data compliance officer to oversee the centralization of Bloomberg's data security efforts.
Bloomberg terminals are ubiquitous among banking and trading companies, with over 300,000 terminals leased throughout the world, and cost an average of $20,000 a year to subscribe.
