Bloomberg LP, the financial news and data business relied on by much of Wall Street, has admitted misleading customers of a key securities pricing product for which it will pay a $5 million fine, the Securities and Exchange Commission announced Monday. Bloomberg had claimed the proprietary pricing index marketed by its subsidiary, Bloomberg Finance LP, was built upon on a sophisticated algorithm that produced its figures, but in some cases the numbers were based on a single broker’s quote, the SEC said.
The service, called BVAL, provides a daily pricing index for around 2.5 million securities in numerous asset classes. Bloomberg told customers it used a complex set of data points to produce the prices. But between 2016 and 2022, the company would sometimes use a single data point to come up with a figure for very thinly-traded fixed income securities, the SEC said. The product was used by as many as 1,300 financial institutions to make decisions on investments, the regulatory agency said. “Bloomberg has assumed a critical role as a pricing service to participants in the fixed-income markets and it is incumbent on Bloomberg, as well as on other pricing services, to provide accurate information to their customers about their …