Friday, May 31, 2013

Honor Amongst Thieves? Bloomberg News Reporters Cross the Line

It’s not often that something happens on Wall Street that should and could make news but gets mentioned casually in passing instead of being thoroughly investigated. But that seems to have happened in the reporting about the latest accusations leveled at Bloomberg financial data and news by public relation chiefs Jake Siewert of Goldman Sachs and Joe Evangelista of JP Morgan Chase.

The accusations are that Bloomberg reporters have been crossing the line drawn in the contract that states they may not use information gleaned from the terminals for reporting. Accusations surfaced when a Bloomberg reporter noticed that a Goldman executive hadn’t logged in for a few days. He called the Hong Kong office to ask what had happened to the executive. When news of it got to Siewert he called Evangelista, who said the same thing had been happening to JP Morgan’s execs.

Bloomberg investigated, admitted that reporters were crossing the line and breaching the terminals contract and agreed to put a stop to it. One would imagine lawsuits and huge press would have ensued but nothing seems to have really happened. It’s a bit of a damp squib, news-wise.

What hasn’t been explained is that the contract allowed reporters a limited period during which they could access help desks and log ins. If they couldn’t use that information why were they allowed to access it?

Much more interesting, though, is that this isn’t the first time executives have complained about reporters crossing the line. So when Siewert took the latest complaint seriously, some executives – reported on by the New York Times on condition of anonymity – admitted to having tried to use the breach to bargain down the price of the terminals! It’s blackmail. Soft blackmail, maybe, no threats, no bad guys, no anonymous notes, but blackmail nevertheless. In a country where people sue for the most tenuous reasons and even win, that nothing came of this is pretty extraordinary. Honor amongst thieves, I guess.

That anybody in Wall Street would be accusing anybody else of crossing the line is amusing. That execs would even openly admit to indulging in blackmail is testament to how much Wall Street believes itself to be above the law. That’s still amusing but in a rather sinister kind of way. 

What’s puzzling is that these two aspects of the same company exist as bedfellows. There are many complaints that Bloomberg News reports destructively on Wall Street goings on, yet Bloomberg financial data terminals are everywhere. And this despite that they’re by far the most expensive at $20,000 apiece. 

Maybe it’s explained by the fact that Bloomberg News is part of Bloomberg L.P., a multinational mass media limited partnership that’s based in the city of New York. Revenue in 2011 was $7.6 billion. Global revenue for the financial data market was $16 billion. No wonder nobody really challenges Bloomberg. And with all those connections, why would they have to bother reducing the price of their terminals? For once Wall Street is on the receiving end. Of a corporation that  probably controls Wall Street. Which pretty much boils down to one man. Michael Bloomberg, the 7th wealthiest man in the US, owns 88% of Bloomberg L.P.