Bloomberg customers now re-examining contracts

Some of Bloomberg LP‘s biggest customers on Wall Street are re-examining their agreements with the financial data and news company to see how much information Bloomberg employees can access from desktop terminals, reports Tom Lowry of CNBC.

Lowry writes, “At its core, the controversy underscores the paradox of the 32-year-old Bloomberg LP, a privately-held company that is vigilant in not disclosing information about its own finances and operations while generating $8 billion a year in revenue providing and collecting massive amounts of data. The terminal, with its countless functions, may just serve as a window into Wall Street’s second-to-second operations. While coveted by traders and other professionals as an indispensable tool, the terminal and its ubiquity in the financial sector may turn this into a much bigger headache for Bloomberg, Tabb said.

“Meanwhile, the controversy has Wall Street buzzing. One hedge-fund manager, who wished to remain anonymous, described the Bloomberg practice as ‘shocking,’ and he has asked his lawyers to review his agreement with Bloomberg to determine what kind of usage information Bloomberg can access from his fund’s terminal.  ‘My initial reaction was a bit of schadenfreude. Like, finally, Goldman’s getting spied on. But then I realized, while it’s fine to spy on Goldman, they could be spying on me,’ he said.

“A source at JPMorgan Chase, who also wished to remain anonymous, said that several Bloomberg reporters have used data about when traders at the firm log into their terminals as the basis for stories about the bank. ‘They were quite open about it. They’d say, ‘We see your Whale trader hasn’t logged in three days. Has he been fired?” the person said. Bloomberg reporters once asked if JPMorgan was pulling back in a certain market segment based on the fact that several traders in that area had not been logging in regularly.

“‘They were trying to figure out our strategy based on who was logging in. That was disturbing,’ the person said. JPMorgan complained to the reporters involved but did not raise the issue with Bloomberg executives.”

Read more here.