(Note: Updated to include additional information on Bloomberg unit called First Word, as well as details acquired by the Wall Street Journal’s Deal Journal. Time stamp on Bloomberg’s first article appears to be Houston time, not ET. Times in this story are all ET.)
BLOOMBERG’s web spider program picked up unreleased earnings information from the website of oil rig company Transocean Ltd (NYSE: RIG) about 40 minutes prior to its official release time, sending the stock into a free fall as investors scrambled to understand what was going on.
Sometime before 3:20pm ET Wednesday, Bloomberg’s web spider retrieved a two-page PDF file from Transocean’s website. The file contained Transocean’s non-GAAP reconciliations and was uploaded to this page on the company’s website in advance of the earnings release and conference call, which is to be held at 10:00am ET Thursday.
From the information in the file, Bloomberg writer Patrick McHale was able to discern the company’s results, including its lower-than-expected EPS and that it was taking a $1.01 Billion charge. He filed a bare-bones report at 3.23pm ET.
No action by NYSE
In the market melee that followed, the New York Stock Exchange took no action to halt Transocean’s stock, disadvantaging investors who did not have access to Bloomberg’s expensive service.
Investors following the company’s ticker symbol on the StockTwits service knew about the leak as early as 3:24pm, but did not have access to the leaked document to confirm the information.
Bloomberg filed a public story about the results at 3:29pm ET quoting “a statement” from Transocean. However, it is clear from the story that the company did not issue a statement to Bloomberg as the only new information in it is contained in the leaked document.
By the time Bloomberg published its story on its public website, the stock was already trading down on abnormal volume. The Vernier, Switzerland-based company eventually released its official earnings document via Marketwire at 4:01pm ET.
Fourth leak, sloppy web security to blame
This is the fourth time in as many months that financial search spiders have leaked information uploaded to unsecured areas of company websites. Bloomberg was responsible for leaking earnings results at Disney last November and NetApp a week later.
Financial information service Selerity, which has confirmed using a search bot to scour corporate websites and other sources, last month broke Microsoft’s earnings early.
The primary reason for these leaks is sloppy web security by the companies. Transocean spokesman Guy Cantwell told IR Web Report the company did not have any statement to make but may do so on Thursday.
Bloomberg has not publicly acknowledged that it uses software to crawl corporate and other websites to retrieve information. However, a senior-level source has confirmed to IR Web Report that the company uses such software and has broken news from the Federal Reserve using it.
According to website TalkingBizNews, a special unit within Bloomberg called First Word was established last summer to scour the web for information and report on it. According to the LinkedIn profile of Patrick McHale, who broke the Transocean news, he works for Bloomberg First Word.
Below is an embed of the PDF document that Bloomberg picked up from Transocean’s website. According to the file’s meta information, it was first created on February 7, 2011 and updated February 22 at 11:45am ET. It was created by someone named April Todd from an Excel spreadsheet labeled “Adjusted Earnings and EPS 4Q10.xls.”