Nasdaq CEO’s social media habit lands her in court
Nasdaq’s CEO should probably get off social media.
Adena Friedman, the head of Wall Street’s second-largest stock exchange, got dragged into Manhattan federal court on Thursday over a business dispute with a fund manager — and a key piece of evidence was her response to an upset businessman who messaged her on LinkedIn.
Nasdaq has accused ETF Managers Group, a New Jersey investment firm, of stealing more than $1 billion worth of exchange-traded funds, as well as $2 million in fees.
But ETF MG argues that Nasdaq is the one who owes money and has breached its contract by shutting off its data feed— and that Friedman was behind the move.
“There is substantial evidence that Ms. Friedman had far more knowledge and involvement in key decision-making than she has thus far admitted,” ETF MG wrote in an April 22 memo. “She was the catalyst for the filing of this action.”
A lawyer for ETF MG, John P. Coffey, brought up as evidence Friedman’s response to a July 2017 LinkedIn message written by Ted Pollack, a San Francisco-based ETF creator whose fund was getting shut down after Nasdaq bought it as part of the broader ETF MG acquisition.
“How can young people trust their ideas and dreams as small companies if the stock market employees are willing to kill someone’s dream without even giving that person the opportunity to fund it,” Pollack asked Friedman in the undated message.
Friedman asked a subordinate to craft a response that, Coffey argued, shows she had an early understanding that the exchange was planning to cut out ETF MG — which would boost his case that the ETF provider was wronged.
“Does he have any ideas that are worth pursuing in terms of saving that ETF business without causing NASDAQ to deviate from our decision to move away from that business?” Friedman wrote in a July 13, 2017 email.
When Friedman took the stand for about 90 minutes on Thursday, however, she downplayed her attempt to respond to Pollack.
“I received this email from a stranger. I responded to it,” she said on the stand. “What can we do to make sure that someone is not upset with us?”
Friedman, wearing a cream blazer over an orange dress, said that she was only aware at the time of the dispute in 2017 that ETF MG hadn’t been paying its bills, and that the situation was being handled by her subordinates
“We had a partner who was not a good partner,” she said, referring to ETF MG. “They were not living up to their obligations.”
Judge Paul A. Engelmayer appeared skeptical that Friedman was behind pushing out ETF MG, and dryly asked her if she would compare herself King Henry II and his roundabout directive to kill his adviser, Thomas Becket in 1170: “Will someone rid me of this troublesome service provider?”
Friedman denied any intrigue of the sort, which was famously depicted in the 1964 drama starring Peter O’Toole and Richard Burton.
“It wasn’t done this way,” Friedman said.
Friedman’s appearance on Thursday comes after months of fierce opposition by Nasdaq to keep its CEO off the stand, arguing that she was only glancingly aware of the details of the dispute with ETF MG.
In addition to recovering the disputed ETFs and unpaid feeds, Nasdaq is seeking $100 million in damages.
