A Corporate Sleuth Claims Squarepoint Capital Took Her Content. The Hedge Fund Is Threatening Action. What Actually Happened?

This is fascinating,   From Institutional Investor


Why the beloved financial data website Footnoted went dark.

On a sunny March morning in 2017, Michelle Leder awoke in her Los Angeles bungalow, turned over in bed, and scrolled through the messages on her iPhone.

One item caught her eye. “Nicolas Elbaze,” the automated email read, “has just reached the limit of free trial views.”

The news was potentially lethal. It was an inkling that Elbaze, a researcher at quantitative hedge fund Squarepoint Capital, might have been seeking improper access to Footnoted.com, the financial website Leder had started 14 years before and had turned into a thriving news and research service.

Elbaze had asked Leder a year earlier for, first, a trial subscription, and then a flat rate for full historical access to reports.

She had refused. Experience had shown her that Footnoted data is fiendishly difficult for quants to format. Firms like Two Sigma Investments, Point72 Asset Management’s Cubist Systematic Strategies, and AQR Capital Management had queried her about subscribing. Leder had even held informal talks with two funds to buy Footnoted outright so they could do the job themselves.

Reluctantly, however, just weeks before the email, she had agreed to provide London-based Squarepoint a trial. Then Elbaze seemed to have ramped up his activity.

“I was just, ‘Holy shit, what’s going on here?’” Leder recalls asking herself at the time. She emailed her developer. “He seems to have downloaded my entire database,” she wrote. “If he did do this, it’s a big BIG problem.”

In fact, Leder estimated that Elbaze had viewed more than 17,000 pages — some of which even paid subscribers couldn’t get a hold of. A forensic investigation commissioned by Leder backed up her assessment.

Eight days after the email alert, Elbaze sent Leder a terse note. “We have investigated Footnoted content and we have come to the conclusion that we would not be able to benefit from it within our research and investment process,” he wrote. “So I’m afraid we won’t take the subscription.”

Leder immediately responded: “I appreciate you letting me know. Given the amount of information that you appear to have taken screenshots of during the trial, specifically on 3/14, I think your fund acted illegally.”

With no response from Elbaze, she escalated the matter.

Leder emailed Squarepoint’s chief compliance officer, Hung Luc, on March 20. “I have never had a legitimate fund abuse the trial access in the way that Elbaze did,” she wrote. “I do not know what Elbaze’s plans are for the data that he blatantly took from my site, but the logs of his activity on the site are crystal clear. At best, he did something highly unethical. At worst, he blatantly stole massive amounts of data from my site.” ,,,,

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