Bloomberg forced to act after reports detail lapses over client data access

Bloomberg is to change its corporate policies to maintain distance between its news and sales operations, after a report recommended dozens of ways that the organization could keep reporters from using client information.

The company released two reports on Wednesday from outside analysts who were called in after clients complained that Bloomberg reporters were accessing data that may have been confidential.

The first report, by law firm Hogan Lovells and compliance experts Promontory, was based on reviews of 500,000 news articles as well as hundreds of interviews, and contained 54 recommendations. The second analysis, by former New York Times public editor Clark Hoyt, recommended that Bloomberg appoint a standards editor and physically separate reporters and salespeople.

Bloomberg CEO Daniel Doctoroff expressed contrition in a letter. "It is clear that we should have been more proactive in considering the evolution of customer data issues as well as the relationship between our news and commercial operations," Doctoroff wrote.

"Personally, I wish I had done more to hasten this evolution, which could have helped to prevent us from making mistakes. That said, I am proud of how our company responded when we became aware of the fact that we needed to change."

Bloomberg commissioned the reviews in May, after appointing former IBM chairman Samuel Palmisano as an independent adviser to examine its privacy and data standards.

The Hogan Lovells/Promontory report concluded that Bloomberg reporters accessed client information like recent log-ins and contact information for reporting, although it also noted that "there was no indication that [the] data served as 'cited source' or was approved as an 'anonymous source'" under Bloomberg's rules of sourcing.

"We found that Bloomberg's current client data policies and practices are reasonably constituted to safeguard client data," the report said.

The report suggested that reporters and editors viewed the information as a fact-checking tool.

The review was based on concerns by investment banks in April that Bloomberg reporters had access to the particular terminal functions, known as "UUID", or "ADSK", which would allow them to see what the report called "limited data", including a client's private email address and his recent logins.

The latter information could be used to indicate when a banker or trader had left his job, or when he was at his desk.

The UUID function also showed how often customers examined particular topics like equity shares or currency markets, according to the reviews. However, "those who did mention using UUID access for that purpose also mentioned that it was not particularly effective for that use," the report said.

The banks that complained, including Goldman Sachs, believed that reporters should not have that access, and complained on April 16. Bloomberg cut off access for reporters to the UUID data on April 19, according to the report.

Hoyt indicated in his review that this UUID access was a relic from Bloomberg's early days, when reporters and the sales staff worked more closely together and with clients to popularize the company's lucrative terminals.

Bloomberg terminals cost roughly $24,000 a year each and are a fixture on every trading floor.

Hoyt said that Bloomberg's new division operates with "strong independence, even to the occasional detriment of its commercial operations".

Bloomberg management agreed to a number of Hoyt's recommendations, which will significantly change its connections between its news and sales teams.

Bloomberg will appoint a standards editor to sit within the office of the CEO, and prohibit reporters and their editors from accompanying Bloomberg commercial staff on sales meetings. Instead, client content would be limited to top editors, who would pitch Bloomberg's news capabilities and take notes for new product development.

Hoyt also recommended that Bloomberg draft new guidelines and offer better training in the company's confidentiality principles; create a working group that would draft guidelines on how much information the sales and news groups could share; end the inclusion of client names in sales recognition communications so that reporters don't see them; ensure the news desk and help desk do not share client names; and ask reporters and sales team members to be discreet.

Hoyt also offered evaluations on Bloomberg's journalism. He suggested that the news organization may pepper too many stories with references to Goldman Sachs even when the stories refer to long-gone employees. He also criticized some stories, like the one that compared a failed JP Morgan bond deal with the Italian town of Cassino with the Nazi sackings of the same city in the second world war.

Emily Bell, director of the Tow Journalism Center at Columbia University, said that Bloomberg's market dominance means the company had to address the concerns of clients.

"When you're a company in that position, it's not enough to say 'Look, we're not actually breaking any rules here.' Sometimes that doesn't matter," Bell said.

"It is about making sure the sentiment stays with you, that people understand that even though Bloomberg may not have broken any rules it still has to be careful it understands why clients want to be careful."