Earlier today, Mark Decambre of the New York Post broke a bombshell story: Reporters at Bloomberg News have been using private information from Bloomberg terminals to spy on employees at Goldman Sachs.
Like many Wall Street firms, Goldman pays Bloomberg millions of dollars a year to buy thousands of Bloomberg terminal accounts for its employees. Bloomberg’s systems track the activity of these individual subscribers in extraordinary detail.
Those with access to these private Bloomberg systems can see when Bloomberg clients are logging on and off and various search functions they use.
The Post’s story revealed that, in a shocking violation of trust, reporters at Bloomberg News have been using this private information to spy on the activity of individual Goldman partners and use the information they have discovered in Bloomberg news stories.
And now we have confirmed that Goldman was not the only firm that Bloomberg reporters were spying on.
According to two sources, Bloomberg reporters also secretly used private client information on the terminal to inform their stories about JP Morgan’s disastrous “London Whale” trade last year.
Bloomberg reporters were the first to break the news that a team of JP Morgan traders in London had made a massive bet on credit derivatives — a bet so big that it was causing distortions in the market. Bloomberg was also the first organisation to name the trader responsible for this bet: Bruno Iksil.
Later, in a timeline of the Whale scandal, Bloomberg bragged about its leadership on this story:
April 5: Bloomberg News is first to report Iksil had roiled markets with CIO positions so large that they were distorting prices. The Wall Street Journal follows with a report that hedge funds are taking positions to bet against JPMorgan. The bank says the CIO hedges structural risks to bring assets and liabilities “into better alignment…
When news of the Whale trade became public, it encouraged other market participants to bet against JPMorgan, which likely contributed to the firm ultimately losing billions of dollars on the trade.
A source within JPMorgan says that the firm believes that, at the very least, Bloomberg News reporters used private login information on the Bloomberg terminal to determine that Bruno Iksil had left JP Morgan.
Bloomberg reporters, the source says, accessed private information on the terminal to determine that Iksil had not logged into his Bloomberg account for an unusually long period of time. Then the reporters confronted JP Morgan with this information and asked whether Iksil had left.
Iksil wasn’t the only one, either.
According to a JP Morgan source, Bloomberg reporters would call JPMorgan CIO traders on their home phone numbers or personal mobile phones and say, “Hey, I noticed you haven’t used your Bloomberg Terminal in a while are you still with the bank?”
Bankers at JPMorgan expressed frustration with this to multiple Bloomberg reporters, a source said.
The source also said that this has happened in broader instances at JP Morgan and not just with the “London Whale” traders. But the “London Whale” event is when it became apparent to JP Morgan that Bloomberg reporters were using their private client information to spy on them.
“They were pretty blatant about saying they noticed if you haven’t logged into your Bloomberg or you haven’t been trading in a while,” a JPMorgan source said.
The general sense is that the behaviour of these Bloomberg News reporters was outrageous.
As one JP Morgan source said, when you buy a Bloomberg terminal, “You don’t think someone’s tracking your every move.”
This misuse of private client information is disturbing enough.
But sources at JPMorgan and another Wall Street firm say that the abuse of private Bloomberg subscriber information by Bloomberg News reporters could potentially be much more widespread and insidious.
If you’re not already familiar with the Bloomberg Terminal, it’s basically a computer that’s targeted toward financial professionals so they can message other users, obtain real-time market data, news, stock quotes among many other functions.
They’re pretty much ubiquitous on Wall Street, and a subscription for one costs about $20,000 per year.
These Bloomberg terminals place a mind-boggling amount of information at a subscriber’s fingertips. And, it has now been revealed, the terminals also record–and make available to Bloomberg employees—certain information about what each subscriber is doing.
A source at Goldman tells us that the firm was dumbfounded and outraged to discover what Bloomberg reporters were doing. The source says that, until recently, Bloomberg News reporters were able to see not just when individual Bloomberg subscribers logged in (and via what device), but exactly what they did while they were logged in.
Specifically, the source says, Bloomberg News reporters were able to see:
- When individual subscribers logged in and logged out (and from where)
- What information these individual subscribers looked at and how often they looked at it
- What news stories individual subscribers read (including the ability for a reporter to look to see who had read his or her story)
It does not take much imagination to see how easily this private information could be used to gain a major edge in financial news reporting—and to blindside Bloomberg clients who had no idea their private terminal activity was being recorded and monitored and made visible to the entire newsroom. Here’s one hypothetical example that a source gave us:
By focusing on the terminal activity of a particularly high profile trader, Bloomberg News reporters might be able to determine what trades the trader might be researching or monitoring. And the reporters might then be able to use this information to ask questions of other traders and, thus, figure out what the particular trader was doing.
The source used legendary trade Steve Cohen of S.A.C. Capital as an example.
Steve Cohen, the source speculated, presumably has an account with Bloomberg. If so, with a few keystrokes, a Bloomberg reporter would have been able to determine when Steve Cohen was logged on to his Bloomberg account and what information he was looking at. If Steve Cohen seemed particularly interested in the price of, say, Apple stock, then the reporter might reasonably conclude that Steve Cohen was monitoring or thinking about making a trade in Apple stock. And the reporter might then be able to use that information to ask around and figure out exactly what Steve Cohen was up to.
We put in a request for comment with Bloomberg and will update when we hear back.