Bloomberg is trying to address privacy concerns around its clients' data by bringing in former IBM chairman and CEO Sam Palmisano to conduct a review of Bloomberg's privacy and data standards.
There have been reports that news reporters at Bloomberg have been snooping on the financial clients of Bloomberg by accessing terminal subscriber data.
Goldman Sachs executives had complained to Bloomberg that a Bloomberg News reporter reportedly monitored terminal logon information for one of its partners to investigate his employment status.
That complaint triggered similar concern among banks including JPMorgan Chase, Bank of America and Deutsche Bank over the security of their data. The US Federal Reserve, the US Treasury Department and the European Central Bank have also expressed concern about the situation.
Bloomberg leases its high-speed financial data terminals for around $20,000 a year to clients, and subscriber financial data and chat conversations that go through the terminals are presumably supposed to be private.
It was reported that some Bloomberg reporters had used a terminal function - now disabled - to find a subscriber’s personal contact information, to monitor whether a subscriber was logged on and to read chats between subscribers and customer service. It is believed reporters could not see specific securities or trades however.
Palmisano joined IBM in 1973 and served as its CEO until 2011. He will now initiate a review of how Bloomberg handles subscriber data and how that data is used internally. Palmisano is said to be a personal friend of Bloomberg founder Michael Bloomberg, and sits on the board of Bloomberg Philanthropies, Michael Bloomberg's charitable group.
To assist Palmisano in the review, the formulation of recommendations, and the implementation of any recommended enhancements, Bloomberg has hired law firm Hogan Lovells and the Promontory Financial Group. "Additional expertise will be retained as necessary", said Bloomberg.
Daniel Doctoroff, Bloomberg CEO, said: “Nothing is more important than our clients’ trust. When a client brought these matters to our attention, we apologised for our mistake and took immediate action including the appointment of an internal client data compliance officer."
He added: "We want, however, to go even further and get the benefit of independent leading experts so that we set the new standard for privacy and data security. This review will be completed expeditiously, thoughtfully and thoroughly.”
Peter Grauer, chairman of Bloomberg, said: “Sam Palmisano is an expert at understanding issues related to technology and data use, having led the transition at IBM from computers to helping customers use technology to solve business challenges."
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