* Says reporters should not have access to proprietary data
* Bloomberg executives apologise to 300 clients
* Central banks probe any breaches of confidentiality
NEW YORK, May 14 Matthew Winkler,
editor-in-chief of Bloomberg News, apologized on Monday for
allowing journalists "limited" access to sensitive data about
how clients used Bloomberg terminals, saying it was
"inexcusable", but that important customer data had always been
His statement came as central banks around the world looked
into any possible breaches in the confidentiality of their usage
Japan's central bank said it had contacted Bloomberg. The
Hong Kong Monetary Authority, which is effectively the
territory's central bank, said it was looking into the matter.
"We are now contacting Bloomberg and are in the process of
confirming the facts of the situation," a spokesman for the
Bank of Japan told Reuters.
The European Central Bank, Brazil's central bank and the
U.S. Federal Reserve have all said they were examining the
issue. A source briefed on the situation said the U.S. Treasury
Department was looking into the question as well.
The practice of giving reporters access to some data
considered proprietary, including when a customer looked into
broad categories such as equities or bonds, came to light in
media reports last week. In response, the parent company,
Bloomberg LP, said it had restricted such access last month
after Goldman Sachs Group Inc complained.
In an editorial posted on Bloomberg.com, Winkler said: "Our
reporters should not have access to any data considered
proprietary. I am sorry they did. The error is inexcusable."
Goldman flagged the matter to Bloomberg after the bank found
that journalists had access to more information than it had
known and argued the information was sensitive and should not be
seen by reporters.
The news triggered fears at Wall Street firms about the
privacy of sensitive data, as well as at the Fed and other U.S.
government departments that use Bloomberg terminals.
In the editorial, Winkler sought to clarify what exactly
Bloomberg journalists could see. He said they had access to a
user's login history, as well as "high-level types of user
functions on an aggregated basis, with no ability to look into
specific security information."
He said the practice dated back to the early days of
Bloomberg News in the 1990s, when reporters used the terminal to
find out what kind of news coverage customers wanted.
"As data privacy has become a central concern to our
clients, we should go above and beyond in protecting data,
especially when we have even the appearance of impropriety,"
Winkler wrote. "And that's why we've made these recent changes
to what reporters can access."
The company's damage-control efforts encountered a potential
setback later on Monday when the Financial Times reported that
thousands of private messages, sent over Bloomberg terminals in
2009 and 2010, were uploaded to a non-secure online site,
apparently by accident.
The messages, sent between traders at some of the world's
largest banks and their customers, contained confidential
financial price information and trading activity, the newspaper
reported. They were later removed from the site.
The Financial Times article quoted a Bloomberg spokesman as
saying: "This work was done with client consent, where emails
were explicitly forwarded to us to a dedicated email account and
released by the person responsible for the email so that we
could conduct internal testing to improve our technology for the
A company spokesman declined further comment when contacted
Data security was an issue that company founder Michael
Bloomberg wrestled with in his 1997 book, "Bloomberg by
Bloomberg". In general, he wrote, restricting access to
proprietary information can be an ineffective exercise.
Often "the whole data security issue is overblown at most
corporations that think they have a lot to guard," wrote
Bloomberg, who has been mayor of New York City since 2002.
"Pilferage and leakage are costs of doing business. Live with
them. While some restrictions make sense, many are ridiculous."
When asked at a news conference on Monday about the current
controversy, Bloomberg said he could not comment because of his
agreement with the city's conflicts of interest board. The
mayor, who Forbes has said has a net worth of $27 billion, has
not been involved in the day-to-day operations of Bloomberg LP
for nearly a dozen years.
In his statement, Winkler emphasized that Bloomberg News
"has never compromised the integrity of that data in our
reporting" and said Bloomberg journalists are subject to
standards that are among the most stringent in the business.
"At no time did reporters have access to trading, portfolio,
monitor, blotter or other related systems," he said. "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."
Even though the information available to Bloomberg reporters
was limited, senior Goldman executives argued that a trader
could profit just by knowing what type of securities
high-profile users were looking at, or what questions a
government official raised with Bloomberg's help desk, people
with direct knowledge of their views said.
The issue made people inside the bank uncomfortable with
even the Bloomberg marketing and sales team's access to
information, the sources said.
In disclosing the new restrictions set last month, Chief
Executive Daniel Doctoroff said Bloomberg had created the
position of client data compliance officer to ensure that its
news operations never have access to confidential customer data.
Closely held Bloomberg, which competes with Thomson Reuters
, the parent of Reuters News, gets the bulk of
its revenue from terminal sales to financial institutions.
Bloomberg has more than 315,000 terminal subscribers
globally, with each Bloomberg terminal costing more than $20,000
a year. Last year it posted revenue of $7.9 billion.
Doctoroff messaged clients via the Bloomberg system on
Tuesday, a client told Reuters, to announce that he had started
a new blog to "speak personally and directly to our clients,
employees and partners" about Bloomberg.
The CEO said he and his executive team had apologised
personally to more than 300 clients and sought to reassure them
about the "mistake".
"We're grateful for the understanding our clients have
shown," he said.
In a statement on Friday, Thomson Reuters said its news
division operates "completely independently, with reporters
having no access to non-public data on its customers, especially
any data relating to its customers' use of its products or