Bloomberg Reporters Caught Spying on Goldman Sachs?

UPDATE 4:36 p.m. ET --Bloomberg LP has responded to the scandal. From the Associated Press:

Financial data and news company Bloomberg LP said Friday that it had cut off its journalists' access to client log-in data on the company's ubiquitous trading information terminals ...

A person familiar with the matter said Goldman Sachs became concerned about outside access after a Bloomberg reporter, investigating what she thought was the departure of a Goldman employee, told the securities firm that the employee had not logged into a Bloomberg terminal for a number of weeks.

The person was not authorized to speak publicly and did so on condition of anonymity.

A Bloomberg spokeswoman said that "limited customer relationship data" had long been available to its reporters, but decided to disable it after receiving the complaint.

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Goldman Sachs executives claim Bloomberg LP reporters have been using the company’s widely used Bloomberg Terminal computer system to “keep tabs on some employees of the Wall Street bank,” the New York Post reports.

But before we go any further, here’s a quick explanation of Wall Street’s favorite computer service [via Investopedia]:

Bloomberg terminals are one of the main product offerings from Bloomberg L.P. and it is one of the most heavily used and highly regarded professional investment systems to be created for the financial marketplace. Institutional investors are the typical customers of this product, since the relatively high ongoing cost makes it unfeasible for individual investors with relatively small amounts of capital to purchase.

As you can see, most of Wall Street relies on Bloomberg’s service – but it apparently comes at a risk.

Bloomberg terminal. (Business Insider)

“The ability to snoop on Bloomberg terminal users came to light recently when Goldman officials learned that at least one reporter at the news service had access to a wide array of information about customer usage,” the report reads.

“In one instance, a Bloomberg reporter asked a Goldman executive if a partner at the bank had recently left the firm -- noting casually that he hadn’t logged into his Bloomberg terminal in some time,” it adds.

Goldman’s top brass, according to the Post’s sources, discovered that Bloomberg reporters could use the terminals to see which of the bank’s employees had logged in and how many times.

Obviously, this raises serious questions about the firm’s security and whether any of its proprietary information has been compromised.

“You can basically see how many times someone has looked up news stories or if they used their messaging functions,” said one Goldman insider.

“It made us think, ‘Well, what else does [Bloomberg] have access to?,' ” the insider said.

Goldman Sachs executives have reportedly met with Bloomberg management to discuss the issue.

Bloomberg terminals. (Wiki Commons).

“Some Goldman traders are still skittish about how much of their terminal usage can be gleaned by Bloomberg — despite assurances from the news and data service that within 24 hours of being alerted by Goldman it pulled the plug on the function that allowed its reporters to snoop,” the report notes.

If they did, how were Bloomberg reports gaining access to Goldman information? The Post explains:

Bloomberg reporters’ ability to access the special so-called customer relationship management (CRM) information features was a holdover from that ’90s era when reporters also worked with the news organizations sales efforts.

“Limited customer relationship data has long been available to our journalists, and has never included clients’ security-level data, position data, trading data or messages,” said Bloomberg spokesman Ty Trippet.

“In light of [Goldman’s] concern as well as a general heightened sensitivity to data access, we decided to disable journalist access to this customer relationship information for all clients,” he noted.

Bloomberg LP was founded in 1983 by New York City Mayor Michael Bloomberg. It costs roughly $20,000 a year for a Wall Street firm to rent a terminal, meaning the business news groups brings in on average more than $6 billion in annual revenues.

Although Mayor Bloomberg no longer oversees the day-to-day operations of the business, but he still owns it:

Michael Bloomberg. (Associated Press)

As of this writing, the business news group has taken no disciplinary action.

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