META Meta Platforms Inc

By Rebecca Ballhaus 

Cambridge Analytica suspended its chief executive, Alexander Nix, and said it is launching an independent investigation to determine if the company engaged in any wrongdoing in its work on political campaigns.

The moves followed the release of a video on Monday that depicted Mr. Nix touting campaign tactics such as entrapping political opponents with bribes and sex. The sales pitch was captured by undercover journalists at British broadcaster Channel 4. Mr. Nix's suspension also follows reports that the company improperly used data from millions of Facebook Inc. profiles without authorization.

The company's independent investigation is aimed at determining whether Mr. Nix or anyone in the company actually used any of the tactics he mentioned in the video, a person familiar with the matter said. Cambridge Analytica was a top vendor for President Donald Trump's 2016 campaign.

Mr. Nix has a close relationship with Rebekah Mercer, a Trump adviser who sits on Cambridge Analytica's board and whose family partly owns the company. People close to the firm said they suspected his relationship with the family was part of the reason he was suspended, rather than forced out.

The company's board suggested the suspension and Mr. Nix agreed to it, the person familiar with the matter said. Mr. Nix had faced internal pressure in recent days to leave the company or take on a low-profile role with few responsibilities, people familiar with the matter said.

A spokesman on Monday said the comments by Mr. Nix in the Channel 4 video "do not represent the values or operations of the firm, and his suspension reflects the seriousness with which we view this violation."

Alexander Tayler, the company's chief data officer, will serve as acting CEO. Julian Malins, a London-based lawyer, will lead the investigation, the results of which the board will share publicly "in due course," the company said.

People close to Cambridge Analytica have long complained about what they describe as Mr. Nix's penchant for exaggerating the company's capabilities and work, sometimes to its own detriment. They said Mr. Nix has repeatedly mischaracterized the work the company did for the Trump campaign, including promoting the idea that Cambridge Analytica had provided psychographic analysis related to the personalities and values of voters to the campaign. The firm didn't provide such analysis to the Republican president's campaign, these people said.

Trump campaign officials have also said the firm didn't provide any such analysis, and have declined to comment on the Channel 4 video.

Mr. Nix's suspension caps a difficult year for the company, which doesn't have a single federal political client today, according to Federal Election Commission reports.

The firm has grappled with staff upheaval and complaints from clients that it fell short in delivering services it promised, several past clients said. The company defended recent staff departures, saying its work on political campaigns means its level of business is cyclical.

It has also come under scrutiny in Special Counsel Robert Mueller's investigation into whether Trump associates colluded with Moscow's efforts to meddle in the 2016 election. Russia has denied interfering in the election and Mr. Trump has denied that there was any collusion with Moscow.

Facebook on Friday said it had suspended the firm from its platform, saying Cambridge Analytica had violated its policies governing how third-party developers can deploy user data they obtained from the company. The Federal Trade Commission on Tuesday said it is looking into Facebook over Cambridge Analytica's use of the platform's data.

A Cambridge Analytica spokesman said the firm's political division didn't use the Facebook data in question. The firm said that it deleted all data it received after it became clear that the way the information was obtained violated Facebook's policies.

On Tuesday, the top Democrat on the House Intelligence Committee said he had "serious questions about the truthfulness" of Mr. Nix's testimony before the panel last year and called for him to appear before the committee. Rep. Adam Schiff (D., Calif.) said Christopher Wylie, who runs a company called Eunoia Technologies Inc. and was a recipient of the same unauthorized Facebook data that Cambridge Analytica had received, had accepted an invitation to appear before the panel.

In the video released by Channel 4 on Monday, Mr. Nix described the company's ability to hide its involvement in elections and described what he said was previous tactics the company had undertaken to damage the political opponents of their clients. "We're used to operating through different vehicles, in the shadows," Mr. Nix told the undercover reporter.

On Monday, the company said the video was "edited and scripted to grossly misrepresent" the conversations.

On Tuesday, Channel 4 released a second video filmed by its undercover journalists of conversations with Mr. Nix and other Cambridge Analytica executives. Company executives appear to discuss possible coordination between the Trump campaign and an allied super PAC, which federal election rules forbid.

In the video, Mr. Nix boasts about the company's work for the Trump campaign, saying it did "all the research, all the data, all the analytics" -- a description Trump officials dispute. Then Mr. Tayler, the company's new acting CEO, describes how they sought to outsource negative advertising to allied super PACs.

Brad Parscale, campaign manager for Mr. Trump's 2020 re-election effort, tweeted on Tuesday of Mr. Nix's comments: "Another day of people taking credit for @realdonaldtrump's victory. So incredibly false and ridiculous."

Representatives for Mr. Nix didn't respond to requests for comment about the second video.

Cambridge Analytica worked for both the Trump campaign and an allied super PAC run by the family of billionaire Robert Mercer, a top Trump donor. Since those two entities were barred from coordinating, Mr. Nix was firewalled off from the company's Trump campaign work and focused exclusively on the super PAC, according to people familiar with the arrangement.

Cambridge Analytica was a top vendor for Mr. Trump's 2016 campaign, earning close to $9 million for data, polling and research services.

Mr. Nix first pitched Trump advisers in May 2016, at the introduction of Steve Bannon, who later that summer was tapped as chief executive of the campaign, and once sat on the Cambridge Analytica board.

Mr. Nix came under scrutiny last year after Wikileaks founder Julian Assange said he had rejected an offer from Mr. Nix in 2016 to help better organize the Hillary Clinton-related emails the website planned to release. U.S. intelligence agencies have concluded that Russian intelligence operatives stole the Clinton emails and gave them to Wikileaks.

Mr. Mueller's team has requested documents from Cambridge Analytica related to its work for the Trump campaign.

Write to Rebecca Ballhaus at Rebecca.Ballhaus@wsj.com

(END) Dow Jones Newswires

March 20, 2018 19:28 ET (23:28 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.