Nasdaq caused $35 mn loss in Facebook IPO: broker

May 24, 2012
A New York broker has asked Nasdaq to compensate it for up to $35 million in losses on the Facebook initial public offering due to the market's computer problems on the first day of trade.

A New York broker has asked Nasdaq to compensate it for up to $35 million in losses on the Facebook initial public offering due to the market's computer problems on the first day of trade.

Knight Capital said in a filing to the late Wednesday that it had submitted a claim to Nasdaq over losses related to Friday's , which disrupted buy and sell orders during the launch of the $16 billin IPO and caused havoc at many brokerages.

"As has been well-publicized, there were numerous issues and problems at Nasdaq relating to the trading of Facebook. Some market participants, including the Company, suffered sizable losses," Knight said in the filing.

"The Company estimates its total pre-tax loss related to the events associated with the trading of to be in the range of $30 to $35 million."

Knight said it had submitted claims for "financial accommodation" from Nasdaq, and that it was weighing all possible options under the law.

But it said it had no assurances it will recover any of the losses, and that its second-quarter earnings results would be affected.

Explore further: Weibo IPO below expectations, raises $285.6 mn

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User comments : 4

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A2G
2 / 5 (4) May 24, 2012
Hahahaha.. This crap coming from the likes of which sit on their fat asses and screw the rest of the world over money.

All over Facebook. A company that the world would be just fine without. Then all these facebook fans act like they are curing cancer.

One of the most overvalued companies out there in large part due to stock brokers like the ones in this article running the hype up to make themselves some more money at the expense of others.
El_Nose
3 / 5 (6) May 24, 2012
Yet another person who know nothing about finance stating wronng information with a smile on their face as they type.

Facebook was overvalued because it priced itself at a 100x multiple to expected earnings. Many IPO's price themselves around 16x. This is also referred to as a P/E ratio. Tech companies tend to go high because of the need for cash, but this was really high, at an upper limit of what people would pay.

Hype does nothing to the price of the stock at an IPO... the company sets its own price. The media hyped this and for good reason. And every analyst out there said 'stay away.'

Stock brokers simply facilitate the buying and selling of stock in the public market. Any analytic reports they create MUST be released to the public before advising clients. There are a lot of regulations surrounding these things, but unless you work in the industry normal people do not know what the rules are. And the penalties are Huge.
Maat
2.3 / 5 (3) May 24, 2012
El Nose is correct, I don't know why he is getting low ratings... I guess if ratings were any indication of what is correct the world would be in a bigger mess than it is right now.
LuckyExplorer
not rated yet May 25, 2012
There is not enough regulation around it.
In theory there are penalties, but...
analysts are also creating a hype with sometimes to high expectations and if they will not be fulfilled, they can also switch over to the other extreme.
But much more doe the brokers and owners. They pannic, or, in an extreme greed, they exceed logical limits.
The whole stock market is far away from any realistic market value.

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