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Fed, Treasury Investigating Bloomberg Client Surveillance

Tyler Durden's picture





 

As reported on Friday, the most recent example of a breach in informational Chinese walls was confirmed at Bloomberg, where it was discovered that reporters have the same degree of client surveillance as workers on the API/terminal side. The reason why this is problematic is that since Bloomberg is a monopolist in the financial terminal industry, with such competitor attempts as Reuters' Eikon being massive failures, virtually every finance professional needs a terminal (even if the rate of sale of such terminals is slowing down as a result of the ongoing financial margin headaches). Which means that Bloomberg journos, an increasingly competitive service to the likes of Dow Jones, Reuters and AP, may have had an unfair advantage when it comes to tracking their "pray" - Bloomberg's own clients.

According to Reuters, such client surveillance may have been what tipped of Bloomberg about Bruno Iksil's behavioral patterns while at JPM: "At JPMorgan, the bank's public relations staffers also fumed to one another last year that reporters called repeatedly to inquire whether Bruno Iskil, the "London Whale" trader who was part of a team that lost more than $6 billion in losses, had left the bank because he had not logged onto his terminal in several days, a source with direct knowledge of these discussions said. JPMorgan did not formally bring the matter to Bloomberg's attention, the source said. Bloomberg said it had no record of a complaint."

And now, following the original Goldman complaint which Bloomberg said ended such informational commingling, it is the turn of the Treasury and the Fed to complain. Again from Reuters:

Bloomberg LP customers, including the U.S. Federal Reserve and the U.S. Treasury, were examining on Saturday whether there could have been leaks of confidential information, even as the media company restricted its reporters' access to client data and created a position to oversee compliance in a bid to assuage privacy concerns.

 

A Fed spokeswoman said on Saturday that "we are looking into this situation and have been in touch with Bloomberg to learn more." A source briefed on the situation said the Treasury Department was looking into the question as well.

Feigned surprise at the degree of information Bloomberg has on all its clients - Fed and Treasury included - aside, what is left unsaid in all of this is the simple question of just why is it material information what the Fed, arguably an entity that at least in a normal world should not have any day to day trade interactions with financial markets, looked up on its trading terminal.

Of course, the Fed's less than joyous response to being tracked externally via Bloomberg is well known. It was our little expose on Kevin Henry's activity status in late 2012 that caused him to go from "green", or reporting his presence, ot "gray", or invisible.

Kevin Henrgy "Green." Also, lots and lots of traders. Not so many economists.

Kevin Henry "Gray" (following this):

That said, not even we have any idea just which Equity, FX or Corp screens Henry, and the rest of the Fed staff were accessing. Or what stocks the NY Fed analyst/trader was engaged with. Only Bloomberg does.

For the sake of transparency, we hope that since Bloomberg-Steagall is very unlikely, just as it is unlikely that the big banks' trading and deposit business will ever be broken up again, at least not before the great reset, that at least Bloomberg will disclose what, if any, covert surveillance it was conducting on the Fed, and specifically which stocks the NY Fed's trading desk was daytrading.

Because in a world of the Russell 2000 trickle down wealth effect, we could all use a stock tip.

Finally, for everyone shocked, shocked that a firm can abuse client informational arbitrage, and even trade against its clients, we refer you back to our 2009 piece "Is Goldman Legally Frontrunning Its Clients?", or better yet, the January 2010 piece, "Goldman Admits To Frontrunning Clients Through Its Prop Desk":

The topic of Goldman frontrunning clients using its prop desk, which has long bothered Zero Hedge, and which in the past received Goldman's vehement refutation, seems to have resurfaced, and to have proven our initial speculations correct. Jane Lattin, assistant to Thomas Mazarakis, head of fundamental strategies, sent out an email to clients earlier, notifying them that the firm in the past has traded ahead of them in its Fundamental Strategies Group, aka its Prop Trading desk, which is, by definition, frontrunning: "The Fundamental Strategies Group is a group of cross-capital structure desk analysts employed by our Securities Divisions to assist our traders. They develop Trading Ideas in conjunction with traders. We may trade, and may have existing positions, based on Trading Ideas before we have discussed those Trading Ideas with you. We may continue to act on Trading Ideas, and may trade out of any position, based on Trading Ideas, at any time after we have discussed them with you. We will also discuss Trading Ideas with other clients, both before and after we have discussed them with you." This answers our repeated queries from July as to whether Goldman is legally front-running its clients for its own prop positions.

Full Goldman letter:

Dear client,

We may from time to time discuss with you Trading Ideas generated by our Fundamental Strategies Group. As part of our commitment to managing conflicts of interest appropriately, this message is to explain how the Fundamental Strategies Group interacts with other parts of our organisation and how that impacts on the Trading Ideas.

The Fundamental Strategies Group is a group of cross-capital structure desk analysts employed by our Securities Divisions to assist our traders. They develop Trading Ideas in conjunction with traders. We may trade, and may have existing positions, based on Trading Ideas before we have discussed those Trading Ideas with you. We may continue to act on Trading Ideas, and may trade out of any position, based on Trading Ideas, at any time after we have discussed them with you. We will also discuss Trading Ideas with other clients, both before and after we have discussed them with you.

You should not consider Trading Ideas as objective or independent research or as investment advice. When we discuss Trading Ideas with you, we will not be acting as your advisor (including, without limitation, in relation to investment, accounting, tax or legal matters) and the provision of Trading Ideas to you will not give rise to any fiduciary or equitable duties on our part. We will not be soliciting any action based on Trading Ideas and it is your responsibility to seek appropriate advice.

Any opinions that we express when we discuss Trading Ideas with you will be our present opinions only and we will not have any obligation to update you in the event of a change of circumstances or a change of our opinions. We prepare Trading Ideas based upon information that we believe to be reliable but we make no representation or warranty that such information is accurate, complete or up to date and accept no liability, other than for fraudulent misrepresentation, if it is not.

If you have any concerns about any of these matters, please do not hesitate to contact us.

Kind Regards

Jane Lattin

Assistant to Thomas Mazarakis – Head of Fundamental Strategies

 

Of course, following the imposition of the Volcker Rule a few months later, which has sought to eliminate precisely this kind of orderflow frontrunning behavior, this has now become a "moot point"... surely.

 


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Sun, 05/12/2013 - 10:56 | Link to Comment deepdish
deepdish's picture

LOL, the irony of Wall Street firms complaining about the lack of Chinese walls in Bloomberg...

Sun, 05/12/2013 - 11:03 | Link to Comment Precious
Precious's picture

The US regulators have discussed the talking points with Bloomberg executives and will be issuing an official press release shortly.

Sun, 05/12/2013 - 11:08 | Link to Comment Xibalba
Xibalba's picture

It's refferred to as 'deep background'

Sun, 05/12/2013 - 11:21 | Link to Comment AssFire
AssFire's picture

Truthful comment not placed here, (reticent of the terms of "hate speech"  ban here)... roll on big smother ahh, I mean big brother.

Sun, 05/12/2013 - 11:26 | Link to Comment Troll Magnet
Troll Magnet's picture

If any of you bitchez say something, anything, about the Jews fighting one another and how they have a death grip on every aspect of our lives, I swear to Baby Jesus I'm going to report you to Tyler!

Sun, 05/12/2013 - 11:36 | Link to Comment Precious
Precious's picture

Once Bloomberg's Jewish technicians disabled the frontrunning feature, viewers of the Seinfeld series on Viacom dropped 90%.

Sun, 05/12/2013 - 11:38 | Link to Comment Doña K
Doña K's picture

Starve the beast. Stay out of the markets

Sun, 05/12/2013 - 11:56 | Link to Comment Precious
Precious's picture

Bernanke subscribes to the Bloomberg-Pro package, which includes a high speed printer and a squawk box to the Rothschild residence.

Sun, 05/12/2013 - 12:39 | Link to Comment Precious
Precious's picture

Mayor Bloomberg today announced that the eavesdropping features are discontinued, and all subscribers will be automatically migrated to the next Bloomberg software release, V 16-oz.

Sun, 05/12/2013 - 12:44 | Link to Comment Precious
Precious's picture

At a press conference this afternoon, Mayor Bloomberg deflected critics of the eavesdropping practice, saying, "Just read the fucking license agreement."

Sun, 05/12/2013 - 12:56 | Link to Comment Precious
Precious's picture

Returning from a meeting with attorneys in London, Rupert Murdoch commented, "Why didn't I think of that."

Sun, 05/12/2013 - 12:59 | Link to Comment espirit
espirit's picture

You mean that when I would place a buy with my online broker, and they short the same stawk 10 to 1 against me, it's ok?

Pick clean the sheeple, but don't tread on the bosses profits.

Kinda dumb if you ask me.

Sun, 05/12/2013 - 13:11 | Link to Comment espirit
Sun, 05/12/2013 - 17:21 | Link to Comment Muppet Pimp
Muppet Pimp's picture

Bloomberg is just doing what all monopolies do given ample time, they are abusing their priveleged position due to their greed.  One would think that say a silicon valley tech outfit could put together a product that would match (exceed even) the bbg terminal capabilities at half the price.  Busting that monopoly must be a tough nut to crack.

Disrupt bitchez...

Sun, 05/12/2013 - 13:19 | Link to Comment Precious
Precious's picture

At the request of the SEC, today Mr. Obama signed an executive order ensuring brokerage privacy rights for everyone but the Tea Party, Conservatives and Patriots.

Sun, 05/12/2013 - 12:46 | Link to Comment Real Estate Geek
Real Estate Geek's picture

Color me not surprised.  A fish rots from the head down.

Sun, 05/12/2013 - 11:40 | Link to Comment Cheesy Bastard
Cheesy Bastard's picture

Whew.  I hope I never misspell Niger,  forget to put the new in front of Guinea, or the span after spic.

Sun, 05/12/2013 - 12:13 | Link to Comment pods
pods's picture

You must also only use "hit the slopes" during winter.

pods

Sun, 05/12/2013 - 13:11 | Link to Comment Cheesy Bastard
Cheesy Bastard's picture

Be careful pods.  "Hit the slopes" might be good for Poles, but would be very offensive to Asians.  Let me have a nip and I'll think about it.

Sun, 05/12/2013 - 16:52 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

And don't call fat chinese people chunks or gay jews heblews either.....

Sun, 05/12/2013 - 11:27 | Link to Comment Precious
Precious's picture

Forward !

Sun, 05/12/2013 - 14:55 | Link to Comment dizzyfingers
dizzyfingers's picture

"...will be issuing an official press release shortly."

Yeah right. All, hold your breath...

Sun, 05/12/2013 - 11:49 | Link to Comment Burt Gummer
Burt Gummer's picture

How much does a bloomberg terminal go for these days? 10,000? 20,000?

It better come with some inside info at that price.

 

http://www.youtube.com/watch?v=deuC8GPr31A

Sun, 05/12/2013 - 12:12 | Link to Comment James
James's picture

I read the other day that those terminals go for 20k per year.

Sun, 05/12/2013 - 12:16 | Link to Comment pods
pods's picture

I got mine for free.

I found the "bill to Kevin Henry" button.

pods

Sun, 05/12/2013 - 10:56 | Link to Comment stopcpdotcom
stopcpdotcom's picture

Pray for the prey.

Sun, 05/12/2013 - 11:06 | Link to Comment Deo vindice
Deo vindice's picture

Or maybe they just prey on those who pray. (Wouldn't that - generally speaking - be conservatives?)

Sun, 05/12/2013 - 11:46 | Link to Comment knukles
knukles's picture

Ah hah!  Just as I suspected.  the Bloomberg-IRS anti Papist Movement is alive and well when all this time I've been called a tin foil mitre conspirator

Sun, 05/12/2013 - 10:57 | Link to Comment resurger
resurger's picture

I want to add me self to the jews circle to get first hand information about futures QEasy and shit.

Sun, 05/12/2013 - 11:24 | Link to Comment francis_sawyer
francis_sawyer's picture

I think you have to be careful in jumping to conclusions here...

~~~

For example, on something like this...

http://www.zerohedge.com/article/goldman-admits-frontrunning-clients-thr...

Now that I've given the matter some thought, I let it sink in a bit... I'm thinking that the 'trades' in that situation ran themselves & executed out of thin air... It's not logical to conclude that there were any PEOPLE involved in that...

Sun, 05/12/2013 - 11:49 | Link to Comment knukles
knukles's picture

Yes, it was all due to the error in the one line of code of the program of mass financial destruction that had been stolen from Goldman and tracked down by the Feebies within hours due to its destructive nature in the hands of the wrong individual.

Sun, 05/12/2013 - 12:05 | Link to Comment francis_sawyer
francis_sawyer's picture

Round up the usual suspects... [oh wait, but not him... or no, not that one... that one there can go free too...]... OK, I think we have our suspects...

Sun, 05/12/2013 - 11:03 | Link to Comment I am Jobe
I am Jobe's picture

Need a 2 hr Odumber speech with Bloomturd to keep the crap safe.

WTF

Sun, 05/12/2013 - 11:03 | Link to Comment Ban KKiller
Ban KKiller's picture

Watched watchers are being watched. Ha fucking ha. All your information is reviewed for loyalty to your master...MONEY. (fiat)

Sun, 05/12/2013 - 11:09 | Link to Comment Race Car Driver
Race Car Driver's picture

::yawns::

Sun, 05/12/2013 - 11:16 | Link to Comment slightlyskeptical
slightlyskeptical's picture

So basically Bloomberg has been front running the markets for decades using the info from client terminals. If so anything less than full forfeiture of all Bloomberg assets is a miscarriage of justice.

Sun, 05/12/2013 - 11:45 | Link to Comment Urban Redneck
Urban Redneck's picture

R.I.C.O.   - why wait for a trial, when Bloomturd's crown jewel can be subjected to the same injustice he subjects his subjects to?

Sun, 05/12/2013 - 11:46 | Link to Comment ThisIsBob
ThisIsBob's picture

Is it wholly unereasonable to suspect that Bloomberg "journalists" were not the only ones with access to this information?

Sun, 05/12/2013 - 11:17 | Link to Comment Rustysilver
Rustysilver's picture

If you can't trust the Bloomberg terminal, who can you trust.

Sun, 05/12/2013 - 11:38 | Link to Comment CaptainSpaulding
CaptainSpaulding's picture

I didnt know they named a bus terminal after Mayor Bloomberg

Sun, 05/12/2013 - 11:24 | Link to Comment firstdivision
firstdivision's picture

How about they investigate the "Chinese Wall" at GS et al?

Sun, 05/12/2013 - 11:26 | Link to Comment IamtheREALmario
IamtheREALmario's picture

Yes, and Goldman's analysts NEVER talk to the internal hedge fund, they call an investment bank. Pot calling the kettle black and the whole Wall Street mess stinks, including the captive media.

Sun, 05/12/2013 - 11:41 | Link to Comment ThisIsBob
ThisIsBob's picture

That terminal likely belonged to the old geezer with the green eyeshades who has a cubicle in the basement of the Treasury building, and who is in charge of the SnP.

I'd be looking for a correction right in here.

Sun, 05/12/2013 - 11:42 | Link to Comment bugs_
bugs_'s picture

very murdochesque

Sun, 05/12/2013 - 11:43 | Link to Comment Joseph Jones
Joseph Jones's picture

If you can't trust a jew named bloomberg, who can you trust? 

Sun, 05/12/2013 - 11:50 | Link to Comment lunaticfringe
lunaticfringe's picture

I find Bloomberg to be an offensive, elite snob, who polices everyone else's conduct while ignoring his own.

Odd, that I can't stomach the prick but never considered his ancestry. There is always one Nazi that will point that out.

Sun, 05/12/2013 - 12:12 | Link to Comment francis_sawyer
francis_sawyer's picture

He only started becoming an offensive, elite snob, who polices everyone else's conduct AFTER the candle lit "conversion" ceremony whereby Douglas C. Neidermeyer whacked his diapered ass with a cricket bat... That cricket bat has special properties...

Sun, 05/12/2013 - 11:51 | Link to Comment Smegley Wanxalot
Smegley Wanxalot's picture

The fed and treasury are just checking with bloomturd to try to see if they can improve their surveillance techniques. May be opportunities for surveillance economies of scale.

Sun, 05/12/2013 - 12:14 | Link to Comment WTF2
WTF2's picture

 Murdock is pissed he did not thnk of that...  Got to hand it to Mike..

Sun, 05/12/2013 - 15:26 | Link to Comment W T F II
W T F II's picture

WTF2,

Sorry, dude (or dudette..?) I inadvertantly took your handle. No harm meant, as I was unaware it pre-existed. Can we coexist..? I am OK, but defer to your pecedence..!!

Sun, 05/12/2013 - 17:04 | Link to Comment Pure Evil
Pure Evil's picture

Stop being a pansey ass. This is fight club. No start beating the shit out of each other for the title of WTF2/II.

Sun, 05/12/2013 - 12:22 | Link to Comment Umh
Umh's picture

The government becomes jealous when other people use the backdoors they insisted be put in.

Sun, 05/12/2013 - 12:22 | Link to Comment Seize Mars
Seize Mars's picture

Headline: Fed, Treasury Investigating US Government Spying on, Murdering Americans

Ah, we know that investigation won't be happening anytime soon, right?

Sun, 05/12/2013 - 12:24 | Link to Comment kchrisc
kchrisc's picture

Do the terminals track what you're drinking and if the container is not "approved?!"         hujel

Sun, 05/12/2013 - 13:05 | Link to Comment espirit
espirit's picture

You'll never know unless you find the hidden camera and microphone...

Sun, 05/12/2013 - 12:24 | Link to Comment Benjamin Glutton
Benjamin Glutton's picture

On Communist Wall Street Bloomberg Terminal uses YOU!

Sun, 05/12/2013 - 13:18 | Link to Comment SubjectivObject
SubjectivObject's picture

On Wall Street, Bloomberg Terminals you!

Sun, 05/12/2013 - 12:28 | Link to Comment ekm
ekm's picture

Everybody knews it was happening. Nobody has a problem it's happening because everybody's doing it.

 

It's just leaked to the media and the anti-bloomberg media is pumping it up into........nothing.

 

MONOPOLY IS MONOPOLY. Move on.

Sun, 05/12/2013 - 12:29 | Link to Comment williambanzai7
williambanzai7's picture

The SEC is investigating if Bloomberg violated adult film regulations by watching Goldman fuck everyone.

Sun, 05/12/2013 - 13:17 | Link to Comment Precious
Precious's picture

Nice. +++

Sun, 05/12/2013 - 12:39 | Link to Comment ebworthen
ebworthen's picture

Picture the Terminator Robot with Alan Greenspan glasses and a Ben Bernanke beard.

He is why the FED needs a Bloomberg terminal.

"Look at these mawkets go!"

"Buy equities folks!"

Sun, 05/12/2013 - 13:16 | Link to Comment SubjectivObject
SubjectivObject's picture

Is there some way individuals might be able to legally classify themselves such that what we as individuals do and when is prevented from being monitored by business interests? (to the extent that gimmemint can be treated separate from business, we can deal with that later)

Why should the phukking phukkerz that phukk everything up get all the prerogatives for privacy, that none of us peedons do?

Sun, 05/12/2013 - 13:20 | Link to Comment Fuku Ben
Fuku Ben's picture

Send in the lap dogs to clean up breaches in the monopolistic control of information inside the pyramid

 

Sun, 05/12/2013 - 14:40 | Link to Comment W T F II
W T F II's picture

The "Soda-War Vendetta"...!!

 

Sun, 05/12/2013 - 14:47 | Link to Comment W T F II
W T F II's picture

Hey,

As long as the artfully-crafted disclaimers are there...EVERYTHING'S KOOL...!!

Here is a template that covers ALL THE BASES:

"We may or may not use any and all information we glean from sources apparent or opaque. Thus, we may or may not share varying degrees of that, or other, information at our sole discretion, with whomever we choose at such time as we choose to, or not."

That covers ALL (individuals, corporations, government, central banks, media, organiztions and institutions of all types) for anything at any time.

ANY QUESTIONS..??

ps. I am NOT an attorney, but haven't we all become amateur attorneys by osmosis..??

Sun, 05/12/2013 - 15:03 | Link to Comment Cacete de Ouro
Cacete de Ouro's picture

Now here this:
Every function in Bloomberg (and here I mean utility/screen/funky four letter mnemonic page) is analysed to the nth degree by product managers, sales people and regional managers. When a new function is launched and promoted by the sales and product people, the userbase is analyzed for depth of use. Then if the users aren't using something it might lead to product training by the product guys, and then the stats are re-analyzed again later. People's performance evaluations include all this mnemonic analysis (well whatever they are responsible for). Resource allocation occurs based on the success of functions etc.

So what i'm saying basically is, every dog and devil at a certain level in bloomberg can get stats on their functions and client usage of same...
including the journos... The journos court the userbase to get stories and know all about them. How the 'fuck' do you think they get their stories...?

Sun, 05/12/2013 - 15:39 | Link to Comment Rustysilver
Rustysilver's picture

Suggestion: it maybe easier to write an article on who is not corrupt in the financial industry. The articles would be a lot shorter.

Sun, 05/12/2013 - 17:27 | Link to Comment highwaytoserfdom
highwaytoserfdom's picture

just keeping the records of news so they can save there A$$es when the FED is gone..

Sun, 05/12/2013 - 17:54 | Link to Comment Miss Expectations
Mon, 05/13/2013 - 04:06 | Link to Comment KashNCarry
KashNCarry's picture

Does it come as an app???  The new Bloomberg app???

Do NOT follow this link or you will be banned from the site!