Nasdaq Approves $40 Million Plan to Cover Facebook Losses
By Nina Mehta - Jun 6, 2012 1:37 PM ET
Nasdaq OMX Group Inc. (NDAQ)’s board approved a plan to compensate brokers whose orders were mishandled in Facebook Inc. (FB)’s initial public offering, earmarking about $40 million to cover losses.
The second-biggest U.S. stock-exchange operator said in a statement today that it would pay about $13.7 million in cash with the rest of the money credited through reduced trading costs for members who suffered losses. The Securities and Exchange Commission must approve the plan, Nasdaq OMX said.
The delays and malfunctions on the Nasdaq Stock Market were the first signs of trouble in the May 18 IPO that burned investors, cost Wall Street market makers an estimated $120 million and prompted lawsuits against the company, its exchange and its underwriters. Facebook is down 32 percent since the $16 billion offering, the biggest ever by a technology company.
“We are still engaged in a review process with the SEC on this,” Eric Noll, the executive vice president for transaction services at Nasdaq OMX, said in a webcast accompanying the release. “It will be subject to change based on their position and some of their thoughts around this. It is taking a while, I think, to get everybody comfortable with it.”
The program Nasdaq announced would cover three kinds of orders placed during the IPO cross: sales priced at $42 or less that either weren’t executed or were executed at an “inferior price,” and purchases priced at $42 that were completed without confirmations being immediately sent to investors.
Hiring IBM
“Accommodations will not be made available for losses that resulted from affirmative decisions by members, or in cases where members told investors that unconfirmed trades had been executed,” according to Nasdaq OMX’s statement today.
The exchange operator said it hired International Business Machines Corp. (IBM) to review its trading systems.
more:
http://www.bloomberg.com/news/2012-06-06/nasdaq-approves-40-million-plan-to-cover-facebook-losses.html
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