Wednesday, May 15, 2013
What Bloomberg’s Snooping Scandal Says About Wall Street’s Culture
On Wall Street, it’s all about finding an edge — no matter how small or seemingly insignificant. Whether it’s a snippet of chatter in a restaurant, a stray comment on the squash court, or a scrap of barroom banter after work, Wall Street traders are constantly on the hunt for nuggets of information they can use to gain advantage over rivals. Because success on Wall Street is often measured in seconds, access to information equals money. That mentality also applies to the hypercompetitive world of financial journalism, as the unfolding Bloomberg snooping scandal demonstrates. With its wide-open office layout packed with shirt-sleeved employees hunched over banks of flickering data terminals, Bloomberg’s newsroom looks like a take-no-prisoners Wall Street trading floor. Apparently, it has been acting like one as well.
For two decades, reporters at Bloomberg News have been using special access to Bloomberg’s ubiquitous financial data terminals to glean sensitive — and potentially proprietary — information about Wall Street banks, hedge funds, and possibly even financial regulators, according to multiple reports. The blockbuster disclosure, first reported by the New York Post, has pulled back the veil on the cozy relationship between the company’s financial-data service and news-gathering divisions, and could undermine the reputation and client trust it has built over three decades since its founding by Michael Bloomberg, currently mayor of New York City.
On Monday, Michael Bloomberg declined to comment on the matter, citing an agreement he made with the city’s Conflict of Interests Board when he first took office in 2002, in which he said he would no longer be involved in day-to-day operations at the company. Michael Bloomberg has an estimated net worth of $27 billion, thanks in part to his majority stake in the company he founded.
Regulators at the U.S. Federal Reserve and Treasury Department — where Bloomberg terminals are widely used — are investigating whether any of their confidential data has been misused, according to Reuters, and the European Central Bank said it was in “close contact with Bloomberg” about any possible data breaches. As if that wasn’t enough, the Financial Times reported late Monday that in an apparently unrelated incident, more than 10,000 private messages between Bloomberg clients in 2009 and 2010 containing “confidential financial price information and trading activity” had been accidentally leaked online.
The Bloomberg data scandal erupted after Goldman Sachs complained last month that a Bloomberg News reporter had called the bank to ask about a partner’s employment status after apparently tracking the executive’s activity — or lack thereof — on a Bloomberg terminal. Bloomberg has more than 315,000 terminal subscribers around the world, including at virtually every major investment bank, hedge fund, private-equity firm, and institution or regulatory agency that closely tracks financial markets. Each terminal subscription costs about $20,000 per year, and that revenue constitutes about 85% of the nearly $8 billion in sales that Bloomberg posted last year.
Each Bloomberg News journalist has access to a terminal, and was encouraged to “harness” its power to find sources or otherwise bolster his or her reporting, as part of Bloomberg’s hard-charging approach to news gathering. Terminal access has long been a sore spot for the company’s rivals, including Reuters and Dow Jones, which compete against Bloomberg as both providers of financial data and news-gathering operations. Because financial journalism is so fast-paced and data-driven, Bloomberg journalists’ special access could have given them an advantage over their competitors. Needless to say, it was hard not to detect a dose of schadenfreude as Bloomberg’s rivals pounced on the story.
Using their terminals, Bloomberg reporters could see a client’s contact information, login history, information about help-desk inquires and other “high-level types of user functions.” Reporters could see whether a client was examining stocks or bonds, but could not see not specific trades. The access was originally designed to allow Bloomberg’s sales teams to tailor service to clients more effectively, but apparently it had been extended to journalists as far back as the 1990s.
Top Bloomberg executives have reportedly been aware of the sensitive nature of the practice since 2011, when a Bloomberg TV anchor was reprimanded for making a comment on the air about the use of terminal data to track a story subject, BuzzFeed reported. After Goldman Sachs complained last month, Bloomberg cut off the special access for reporters. In a statement, Bloomberg LP CEO and president Daniel Doctoroff called the practice a “mistake,” and said the company had appointed a senior executive to the new position of client-data-compliance officer.
Meanwhile, Matthew Winkler, editor in chief of Bloomberg News, apologized for allowing journalists “limited” access to sensitive financial data about the company’s clients. “Our reporters should not have access to any data considered proprietary,” Winkler wrote in an editorial posted on Bloomberg’s website. “I am sorry they did. The error is inexcusable. Last month, we immediately changed our policy so that reporters now have no greater access to information than our customers have. Removing this access will have no effect on Bloomberg news-gathering.”
Bloomberg terminals have become such a vital and ubiquitous tool on Wall Street that it’s unlikely that the company will face a massive client exodus, especially given the fact that Bloomberg will presumably be extremely sensitive about data security moving forward. Still, many on Wall Street were not amused by the episode, and it’s clear that Bloomberg’s reputation has taken a hit.
“If that’s true and they had access to all of that information, that’s totally ridiculous and Bloomberg should be thrown under the bus,” Michael Cohn, chief market strategist at Atlantis Asset Management, told CNBC. “That’s just so pathetic. I don’t understand how this policy got institutionalized in the first place, and how it was allowed to go on for so long.” But, he added, Bloomberg terminals are “irreplaceable in many ways.”Read more: http://business.time.com/2013/05/14/what-bloombergs-snooping-scandal-says-about-wall-streets-culture/#ixzz2TOFn5d3X
Pressure intensifies on Bloomberg after new 'snooping' scandal twist
Bloomberg apologized after the financial news agency let its reporters access clients' information
THIS IS A DISCLAIMER REGARDING THE FOLLOWING. I HAVE HAD A GUT FEELING ABOUT THIS ALL ALONG BECAUSE OUR GOVERNMENT HAS BECOME SO CORRUPT. I DON'T NECESSARILY DOUBT THAT SEAL TEAM SIX WERE TAKEN OUT BY OUR OWN GOVERNMENT TO SILENCE THEM. HOWEVER, I HAVE DONE MY RESEARCH ON THE INTERNET AND I AM NOT A PERSONAL WITNESS OF THE EVENTS. YOU WILL NEED TO DECIDE FOR YOURSELF.
Families of Navy SEALs killed in 2011 attack say government is to blame
One by one, homes sinking in California subdivision
By Tracie Cone / The Associated PressPublished: May 15. 2013 4:00AM PST
Jagtar Singh gazes from the doorway into one of the bedrooms that collapsed as the ground gave way beneath his home in Lakeport, Calif. Shortly after Singh moved his wife, 4-year-old daughter and his parents, the hill behind his home collapsed.
Rich Pedroncelli / The Associated Press
Rich Pedroncelli / The Associated Press
LAKEPORT, Calif. — Scott and Robin Spivey had a sinking feeling that something was wrong with their home when cracks began snaking across their walls in March.
The cracks soon turned into gaping fractures, and within two weeks their 600-square-foot garage broke from the house and the entire property — manicured lawn and all — dropped 10 feet below the street.
It wasn’t long before the houses on both sides collapsed as the ground gave way in the Spivey’s neighborhood in Lake County, about 100 miles north of San Francisco.
“We want to know what is going on here," said Scott Spivey, a former city building inspector who lived in his four-bedroom, Tudor-style dream home for 11 years.
Eight homes are now abandoned and 10 more are under notice of imminent evacuation as a hilltop with sweeping vistas of Clear Lake and the Mount Konocti volcano swallows the subdivision built 30 years ago.
The situation has become so bad that mail delivery was ended to keep carriers out of danger.
“It’s a slow-motion disaster," said Randall Fitzgerald, a writer who bought his home in the Lakeside Heights project a year ago.
Unlike sinkholes of Florida that can gobble homes in an instant, this collapse in hilly volcanic country can move many feet on one day and just a fraction of an inch the next.
Officials believe water that has bubbled to the surface is playing a role in the destruction. But nobody can explain why suddenly there is plentiful water atop the hill in a county with groundwater shortages.
“That’s the big question," said Scott De Leon, county public works director. “We have a dormant volcano, and I’m certain a lot of things that happen here (in Lake County) are a result of that, but we don’t know about this."
Other development on similar soil in the county is stable, county officials said.
While some of the subdivision movement is occurring on shallow fill, De Leon said a geologist has warned that the ground could be compromised down to bedrock 25 feet below and that cracks recently appeared in roads well beyond the fill.
“Considering this is a low rainfall year and the fact it’s letting go now after all of these years, and the magnitude that it’s letting go, well it’s pretty monumental," De Leon said.
County officials have inspected the original plans for the project and say it was developed by a reputable engineering firm then signed off on by the public works director at the time.
“I can only presume that they were checked prior to approval," De Leon said.
The sinkage has prompted county crews to redirect the subdivision’s sewage 300 feet through an overland pipe as manholes in the 10-acre development collapsed.
Consultant Tom Ruppenthal found two small leaks in the county water system that he said weren’t big enough to account for the amount of water that is flowing along infrastructure pipes and underground fissures, but they could be contributing to another source.
“It’s very common for groundwater to shift its course," said Ruppenthal of Utility Services Associates in Seattle. “I think the groundwater has shifted."
If the county can’t get the water and sewer service stabilized, De Leon said all 30 houses in the subdivision will have to be abandoned.
Looking for help
The owners of six damaged homes said they need help from the government.
The Lake County Board of Supervisors asked Gov. Jerry Brown to declare an emergency so funding might be available to stabilize utilities and determine the cause of the collapse. Last week, state Sen. Noreen Evans, D-Santa Rosa, wrote a letter of support asking Brown for immediate action. The California Emergency Management Agency said Brown was still assessing the situation.
The state has sent a water resources engineer and a geologist to look at the problem. Sen. Dianne Feinstein sent a representative as well.
Lake County, with farms, wineries and several Indian casinos, was shaped by earthquake fault movement and volcanic explosions that helped create the Coast Ranges of California. Clear Lake, popular for boating and fishing, is the largest fresh water lake wholly located in the state.
It is not unusual for groundwater in the region to make its way to the surface then subside. Many natural hot springs and geysers receded underground in the early 1900s and have since been tapped for geothermal power.
Homeowners now wonder whether fissures have opened below their hilltop, allowing water to seep to the surface. But they’re so perplexed they also talk about the land being haunted and are considering asking the local Native American tribe if the hilltop was an ancient graveyard.
Entire neighborhood in Northern California sinking
into the ground for unknown reason
Monday, May 13, 2013
LAKEPORT, Calif. (KABC) -- A slow-moving disaster in a Northern California community is taking its toll on homeowners.
An entire neighborhood of homes in Lakeport is literally being swallowed by the Earth. No one knows exactly what's causing the huge cracks in the ground, but a dormant volcano could be the cause.
This all began in March when a homeowner noticed cracks snaking across walls. Those cracks turned into fractures, and within weeks, several homes were beginning to sink.
As of Monday morning, 30 homes were threatened; eight have already been abandoned and 10 are under notice of imminent evacuation.
"Anybody would be afraid of here. It's only because of the unknown. You don't know what's going to happen. I'm told I'm safe, I assume I'm safe, but does anybody really know yet?" said resident Alberta Diaz.
Officials have suspended mail delivery to keep carriers out of danger. They've also redirected sewage because manholes collapsed.