An outside review of Bloomberg LP's data compliance and news reporting revealed that the financial data and news provider didn't curtail reporters' The review, by Promontory Financial Group and law firm Hogan Lovells, didn't point to any evidence of widespread abuse of customer data by Bloomberg News. It concluded that "a number of journalists" used subscriber data in the course of their reporting, such as for looking up contact information, but it identified only two occasions where subscriber information or other sensitive data was clearly reflected in stories.
In one of those examples, journalists reported on the pricing of a mortgage backed security offering using data on Bloomberg's financial terminals that wasn't available to all subscribers, the report found. Bloomberg said the reporter and editor responsible for the story didn't know the data wasn't available to all users. In the other, in 2011, a Bloomberg television reporter revealed on-air that he had used subscriber information available to Bloomberg journalists to report on rogue UBS trader Kweku Adoboli.
The report, which former IBM Chairman Samuel Palmisano advised on, and a separate study about newsroom practices by Clark Hoyt, who is a Bloomberg editor and a former New York Times public editor, will be released to Bloomberg clients and the public on Wednesday morning. Both reports were reviewed by The Wall Street Journal.
The reports recommended a series of steps to improve company practices, which Bloomberg has agreed to adopt.
These include that the firm hire a chief risk and compliance officer and the appointment of a standards editor, as well as the creation of separate editor and "task force" positions that are independent of the newsroom and that will focus on issues like external complaints and best practices, Bloomberg said. Bloomberg also agreed to institute third-party audits into data practices and to take steps to better separate the company's commercial and news divisions.
"While there were no major new issues identified, our work is not done," Chief Executive Dan Doctoroff said in a note to clients to be distributed Wednesday and which was reviewed by the Journal.
Bloomberg commissioned the reviews in May, after disclosures that Bloomberg journalists had long had access to certain limited subscriber data, such as whether subscribers were logged onto their Bloomberg terminals and what kinds of functions a subscriber was using broadly. The company in April restricted its journalists' access to subscriber data, following a complaint from Goldman Sachs Group Inc., GS +0.59% a big client.
At the time, it also appointed an executive to a newly created position of client data compliance officer. The report by Promontory found that in the wake of those steps, Bloomberg was in line with appropriate standards for data security and regulatory compliance, based on comparisons to industry standards in place for other financial institutions and data providers. Nevertheless it recommended the creation of a more senior chief risk and compliance officer who would report to the CEO and oversee departments such as client data security, corporate compliance and security.
In an approximately 100-page report, Promontory found that Bloomberg executives including Mr. Doctoroff had recognized a need to curb journalists' access to subscriber data as early as September 2011, after the on-air reference to the UBS trader. But "no such action was taken due to misunderstandings about who was responsible for doing so," the review by Promontory found.
"It was simply a miscommunication. We regret that very much," Mr. Doctoroff said in an interview.
The report cited other examples of Bloomberg journalists using subscriber data in the course of their reporting. In one case, Bloomberg journalists participated in anonymous chat room discussions with commodities traders, who wouldn't have known that unidentified journalists participated in the forums, or have known in general who was participating in the chats. Journalist access to anonymous Bloomberg chat rooms has since been eliminated, Bloomberg said.
In another example, a reporter accessed the private cellphone number of a client through sales department data that wasn't available to the broader news division.
Much of the review was focused on subscriber information from 24 non-contiguous weeks between June 2012 and April 2013. Bloomberg didn't have logs of such information "in a form well suited to a historical review," for the period before June 2012, the Promontory report said. The review also drew on a variety of other sources, including Bloomberg chat rooms and other functions linked to its financial terminals.
The Promontory review noted that "many" Bloomberg journalists interviewed during the review process believed that they were expected to not disclose to clients and sources the extent to which they could access customer data.
"There was, at the very least, an understanding that journalists should not reveal to terminal users that journalists had access" to subscriber data.
The report by Mr. Hoyt, who joined Bloomberg as an editor-at-large in 2010, looked at the relationship between Bloomberg's newsroom and commercial divisions.
His report noted concerns about several editorial practices, such as policies for correcting errors in articles, and the choice of language for "headlines where clarity can be an issue," noting headlines such as "DSM's Flirt with Red Hot Mamas Cuts Investor Love for Plastics."
Mr. Hoyt's report found no evidence of negative bias in Bloomberg's reporting and pointed to further steps the company has taken for clients and readers to voice issues about stories, such as help desk service.
But his report said that Bloomberg "went too far" in a December 2011 article which compared the impact of an interest-rate swap on an Italian municipality, Monte Cassino to World War II. Bear Stearns Cos., which J.P. Morgan Chase & Co. bought in 2008, had sold the swaps.
J.P. Morgan, a big Wall Street client of Bloomberg, had been angry about the article. Bloomberg News had previously concluded that the story adhered to newsroom standards and told the bank it wouldn't issue a correction, The Wall Street Journal reported previously.
But Mr. Hoyt's report "concluded that the literary device used in the Monte Cassino story went too far."
The reports by Promontory and Mr. Hoyt both called for greater measures to separate Bloomberg News from its commercial operations-similar to the divisions separating research and investing divisions inside big banks.
Journalists' access to subscriber data was a relic of Bloomberg's early days. The firm started as a markets data provider, adding news as a perk to subscribers. In its early days in news, Bloomberg journalists were given access to subscriber data in order to participate in occasional sales meetings with Bloomberg subscribers, the company has said. But it didn't curtail reporters' access to subscriber data, even as journalists' participation in sales calls declined. New guidelines permit editors and reporters to meet with clients only for newsgathering purposes.
Mr. Hoyt recommended that Bloomberg journalists shouldn't be "separated altogether" from the company's financial terminals. "News, data and analytics are thoroughly integrated to the benefit of clients and Bloomberg."
Dow Jones & Co, publisher of The Wall Street Journal, competes with Bloomberg in financial news.