[QODLink]
Americas
Nasdaq offers $40m in Facebook compensation
Money set aside for traders who lost money due to technical fault on first day of trading of US social network company.
Last Modified: 07 Jun 2012 11:45
Facebook shares fell flat on its much-hyped debut day, ending barely above the starting price [Reuters]

The Nasdaq stock exchange has said it will offer $40m in cash and rebates to facebook investors who lost money on the social network's much-hyped stock market debut because of technical glitches.

The exchange said on Wednesday that $13.7m would be paid to its affected member firms and the balance would be credited to members to reduce trading costs, with all benefits expected to be awarded within six months.

"We have been embarrassed and certainly we apologised to the industry, but the important thing we have to do is focus on the future," Robert Greifeld, Nasdaq's chief executive, said in an interview on CNBC network.

Facebook went public on May 18 amid great fanfare, but computer faults at the Nasdaq threw the day into chaos, delaying the opening by half an hour.

The shares opened at $38, but rose sharply in early morning trade, something the investors wanted to capitalise on by selling at that time.

Many investors could not buy shares in the morning and sell them later in the day, or even know whether their orders went through. Some investors complained that they were left holding shares they did not want.

'Subsidise Nasdaq's missteps'

The Nasdaq said it would reimburse investment firms that tried to sell shares at $42 or less but either could not sell or sold at a lower price than they intended.

It will also reimburse investment firms that bought at $42 but in trades that were not immediately confirmed.

It is not clear what will happen next as the Nasdaq still has to get approval from the Securities and Exchange Commission for its plan.

Facebook shares ended flat on its debut day and have faltered since, falling to about $25 a share.

The top four market makers in the $16bn IPO - UBS, Citigroup, Knight Capital, and Citadel Securities - together lost upward of $115m due to technical problems.

The New York Stock Exchange (NYSE), the Nasdaq's chief rival, fired off a statement condemning the move, saying the Nasdaq was giving itself an unfair advantage and rewarding itself for its own mistakes.

"This is tantamount to forcing the industry to subsidise Nasdaq's missteps and would establish a harmful precedent that could have far reaching implications for the markets, investors and the public interest,'" the NYSE said in a statement.

The Facebook offering has left a bad taste for many investors, though they do not blame Nasdaq alone.

Many also think that the leading social network firm, as well as Morgan Stanley, the main bank that underwrote the deal, overestimated demand, pricing the shares too high and issuing too many.

430

Source:
Agencies
Topics in this article
People
Organisation
Featured on Al Jazeera
An innovative rehabilitation programme offers Danish fighters in Syria an escape route and help without prosecution.
Street tension between radical Muslims and Holland's hard right rises, as Islamic State anxiety grows.
Take an immersive look at the challenges facing the war-torn country as US troops begin their withdrawal.
Ministers and MPs caught on camera sleeping through important speeches have sparked criticism that they are not working.
Featured
Chinese scientists are designing a particle-smashing collider so massive it could encircle a city.
Critics say the government is going full-steam ahead on economic recovery at the expense of human rights.
Spirits are high in Scotland's 'Whisky Capital of the World' with one distillery thirsty for independence.
President Poroshenko arrives in Washington on Thursday with money and military aid on his mind, analysts say.
Early players in private medicine often focused on volume over quality, turning many Chinese off for-profit care.
join our mailing list