May 13, 2013. New York. The king of business data and reporting admitted this morning that its employees have been secretly spying on the activities of some of the most powerful individuals in the world. Bloomberg used its famed computer terminals to peer back at its customers to monitor their actions. Goldman Sachs was the first major institution to accuse Bloomberg of spying, with federal officials scrambling to discern if any laws were broken.
Goldman Sachs reportedly blew the whistle on Bloomberg's spying. Image courtesy of the Guardian.
Just before the internet was invented, billionaire Michael Bloomberg had developed a real-time data tracking database that could be accessed by any patented Bloomberg terminal in the world. With millions of investors, and thousands of news outlets, desperate to get their hands on the latest news first, the Bloomberg data terminals became a monopoly overnight as the only source in the world that could collect and distribute market-moving information moments after its release.
In 1982, Michael Bloomberg, Merrill Lynch and a handful of smaller investors officially launched the company’s patented data terminals. The Wall Street bank also became the company’s first customer that year, installing 22 terminals. Today, Bloomberg makes up a full one-third of the entire financial data industry with an estimated annual revenue of $7.6 billion. The company reportedly charges $20,000 per year for its streaming service and has over 300,000 paid subscribers.
With a virtual monopoly in place, in 1990 Bloomberg utilized its vast arsenal of data to launch a Bloomberg news division to compliment its financial data system. In 1993, Bloomberg.com was launched, becoming one of the first firms in the world to use the internet as its business platform. Today, the corporation offers 30,146 tools and functions to its customers to allow them to mine the world’s financial and news data.
Much like a two-way mirror in a police interrogation room, Bloomberg’s customers had no idea that their connection to Bloomberg’s data terminals was actually a two-way street. While users were logged onto Bloomberg, Bloomberg was collecting data on them. One secret activity Bloomberg has admitted its reporters engaged in was monitoring the times certain important individuals were actually logged onto Bloomberg, as well as when they logged off, how long they were on the service and how long they were off.
Business network CNBC is reporting that some of the individuals its competitor Bloomberg News spied on include Federal Reserve Chairman Ben Bernanke, Treasury Secretary Timothy Geithner and a host of executives from the world’s largest banks, including Goldman Sachs and JP Morgan.
In additional to log-in activity, Bloomberg also admits to spying on its own Help Desk. When customers called in for support or assistance, some of the information was allegedly secretly monitored and used by Bloomberg staff. Reportedly, the information was only used to aid in developing story details for its news division.
In a statement released by Bloomberg News’ Matthew Winkler, the news outlet’s senior editor apologized to its customers. “Our reporters should not have access to any data considered proprietary. I am sorry they did,” his statement read, “The error is inexcusable."
The story first broke over a week ago when a Bloomberg News reporter was interviewing an executive from Goldman Sachs. During the question and answer session, the Bloomberg employee asked about the login and computer habits of another Goldman executive. The financial firm’s representative being interviewed immediately became alarmed at the seeming admission that Bloomberg employees not only had access to that type of personal information, but were openly using it as part of their research on news stories.
The question for law enforcement officials now becomes – did Bloomberg engage in any illegal activity while spying on its customers and collecting personal information. Bloomberg’s Winkler attempted to reassure customers and government regulators alike saying, “At no time did reporters have access to trading, portfolio, monitor, blotter or other related systems. Nor did they have access to clients' messages to one another. They couldn't see the stories that clients were reading or the securities clients might be looking at."
Criminal acts, conflicts of interest
While Bloomberg executives insist the actions of their news staff was innocent and not used to affect any business dealings or financial matters, the corporation’s CEO issued a statement to Bloomberg employees on Friday. In it, CEO Dan Doctoroff admitted that the accusations were true, but that the practice of monitoring its customers was a mistake. He wrote, “Client trust is our highest priority and the cornerstone of our business, and we are deeply committed to ensuring the complete integrity and confidentiality of our clients' data in all situations and at all times.”
European news outlets are reporting that the SEC is investigating Bloomberg for possible wrong-doing. But that raises an additional set of questions. The Securities and Exchange Commission, the regulatory arm of the US government concerning the financial industry, is not only charged with investigating Bloomberg, but the federal agency is also a customer of Bloomberg terminals and a potential victim.
Corruption and complicity
The controversial admission by Bloomberg also gives a great deal of credence to the 99-perenters. They’ve long condemned the culture of corruption between Washington and Wall Street, aka the 1-percent. Past evidence of collusion between the two include insider trading by Congressmen, trillion dollar bank bailouts, no prison for anyone involved in the economic collapse, and the revolving door between government regulators and financial firms.
This latest controversy within the Bloomberg empire exposes a host of potential conflicts of interest that would most likely protect any individuals from criminal prosecution. Consider this. Michael Bloomberg is the major owner of Bloomberg LLC, the corporation caught spying on government and banking officials. He is also the Mayor of New York and the commander of the largest local police force in the nation, with armies of military-style police active in counter-terror missions all over the world.
The NYPD has long been criticized as becoming a global political terror force used as a private army by New York Mayor Michael Bloomberg. The mayor has even referred to the city’s police force as his own personal army in the past. With the city of ‘New Bloomberg’ being home to Wall Street and every major financial institution in the world, the mayor can make life a living hell for any and all critics, including federal investigators and bank CEO’s.
With Bloomberg News’ competitors, especially the cable business channel CNBC, making the most of the Bloomberg controversy with non-stop coverage and humor, this story won’t go away any time soon. And as more and more details slowly come out, it may even be bigger than Bloomberg or federal officials want to admit. Regardless, nobody including government authorities, has any plans to cancel their Bloomberg terminal subscriptions. Even Goldman Sachs and JP Morgan have admitted as much. As one Wall Street executive put it, “They’re the only game in town.” For Bloomberg, that’s a double-bonus – too big to fail, too big to jail.
Read the full statement from Bloomberg.com.
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