I’m not sure what’s more surprising – that Bloomberg reporters have been using Bloomberg terminals to snoop on customers, or the fact it was The New York Post that broke the story. Given its reporting on the Boston Marathon bombing, I half expected it would later come to light the Post was wrong – not that it would admit it. Instead of Bloomberg reporters it might end up being a blogger name Ziffy, who eavesdropped on a conversation in a public mens room. Alas, the Post report appears accurate.
While Bloomberg reporters’ action may not be illegal (I think), there’s only a semantic difference between what they’ve done and what News Corp. did in the phone hacking scandal. To recap, “several hundred reporters” at Bloomberg News, according to The New York Times, have, for years, hit the “Z” function on Bloomberg terminals followed by a company’s name to access behavioral information such as the last time a subscriber logged on how often he or they checked out corporate bond trades or equities indices.
This may not sound like much, but in the hypercompetitive arena of business journalism and the even more secretive world of Wall Street it’s enough to offer a reporter leverage. Last summer, after JPMorgan Chase experienced a multi-billion trading loss, some Bloomberg reporters called the bank to find out whether the traders responsible had been fired. “They cited the fact that the traders had gone silent on the terminal,” the Times reported. Reporters did the same thing with Goldman Sachs, when they sought to find out the fate of one of the firm’s partners. This time, instead of copping silence, which is what Chase did, Goldman complained, and the activities came to light.
How different is this from News Corp. and its phone hacking scandal? With Bloomberg you have customers paying roughly $20,000 a year per terminal and rely on them to help execute trades with vast sums of money at stake. With the phone hacking scandal you had employees of Rupert Murdoch-owned newspapers accessing voicemails belonging to politicians, celebrities, and the British Royal Family. They also tapped into the phones of relatives of deceased British soldiers, victims of the July 2005 London bombings, and a murdered schoolgirl.
Hacking voicemail is illegal. In a famous case involving journalism ethics, Cincinnati Enquirer reporter Mike Gallagher hacked into voicemail belonging to executives of Chiquita Banana to help him research a damning story on the company’s labor practices in Latin America. When Chiquita threatened to sue for libel, the paper, owned by Gannett, caved and published a front-page apology for three straight days and renounced the series. Nevertheless, Gannett ended up paying Chiquita $14 million and Gallagher was convicted of unlawful interception of communications and unauthorized access to voice-mail system. Gallagher was sentenced to parole and community service and eventually a judge expunged his conviction
If you think about it, Bloomberg reporters’ actions were not dissimilar to Gallagher and News Corp.’s. They intercepted information they were not supposed to have and gained unauthorized access to customers’ accounts. The difference: The latter is illegal. The former? It’s hard to say. Plus News Corp. employees also bribed officials to gain access to information, so on the sliminess scale Murdoch wins (or loses, depending on your point of view).
Bloomberg has reportedly apologized and disabled the function that enabled its reporters to access customer information. In the end, if there’s any permanent damage it will probably come down to the company violating the trust of its customers.
That’s funny: On Wall Street trust is viewed as currency. That’s even more ironic than the New York Post being the one to break this story.