US clears Nasdaq payout in Facebook IPO debacle (Update)

Mar 25, 2013

The Nasdaq on Monday had the backing of US regulators who approved the stock exchange's latest plan to compensate investors for the botched debut of Facebook shares last year.

Despite concerns expressed by some investors, the US Securities and Exchange Commission endorsed Nasdaq's proposal to amend its rules to create a $62 million pool of cash to pay out claims related to the Facebook IPO, documents available online showed.

"It is therefore ordered that the proposed rule change be, and hereby is, approved," SEC deputy secretary Kevin O'Neill said in a notice available at the commission's website.

The SEC noted in its order that investors unhappy with the Nasdaq compensation plan could opt not to file claims with the regulator and seek other remedies, such as taking their cases to civil court.

The Nasdaq in July of last year raised to $62 million the amount of money it will set aside to cover trading losses due to computer glitches that disrupted the launch of Facebook shares onto the market.

The huge electronic market's foul-up marred the $16 billion Facebook share issue on May 18 of 2012, the most hotly awaited initial public offering on the US markets in years.

"We deeply regret the problems encountered during the initial public offering of Facebook," Nasdaq OMX Group chief executive Robert Greifeld said in a statement at the time.

"We have learned from this experience and we will continue to improve our trading platforms."

Nasdaq has previously proposed setting aside $40 million to cover brokers' losses caused by the botched IPO but the compensation plan immediately ran into criticism as being inadequate.

Nasdaq said it expected all claims covered by the plan to be paid out within six months.

The stock hit a high of $45 on the first day, but since then has lost ground. Facebook shares were trading at $25.14 at the Nasdaq close on Monday.

Facebook's IPO overwhelmed Nasdaq's systems when it hit the market, forcing a half-hour delay in opening trading and leaving investors and brokers in the dark for hours over the results of orders involving millions of shares.

The glitch dealt a black eye to the exchange, which trades some of the world's largest companies, including Apple and Microsoft.

Explore further: Airbnb to expand tax collection efforts

add to favorites email to friend print save as pdf

Related Stories

Nasdaq ups ante in Facebook reimbursement plan

Jul 21, 2012

(AP) — The Nasdaq stock exchange is chipping in more money to reimburse investment firms that lost money when online social network Facebook went public in May because computer glitches delayed their trading orders.

Reports: UBS may have $350M Facebook trade losses

Jun 09, 2012

(AP) — Swiss bank UBS AG may have lost as much as $350 million due to technical glitches on the Nasdaq stock exchange the day Facebook went public, according to reports published Friday.

Nasdaq readies payouts for Facebook IPO glitch: WSJ

Jun 05, 2012

Nasdaq is taking steps toward compensating investor losses due to computer glitches that fouled trading on the first day of Facebook's $16 billion IPO, the Wall Street Journal said Tuesday.

Recommended for you

Airbnb to expand tax collection efforts

18 hours ago

Online lodging operator Airbnb is expanding its efforts to collect local taxes, responding to complaints that it competes unfairly with the hotel sector.

Jay Z to acquire Wimp music service

19 hours ago

US rap star Jay Z will make a $56-million foray into the music streaming business by taking over the Norwegian service Wimp, its shareholders confirmed Friday.

How can Google snap its stock out of its stupor?

Jan 30, 2015

Google has turned into a stock market laggard as the shift to mobile devices has lowered the Internet search leader's digital ad prices and the company's expensive investments in far-out technology has trimmed ...

Amazon surprises with profit despite fierce spending

Jan 29, 2015

Amazon surprised the market Thursday with a quarterly profit far better than anticipated for the online giant known for pouring money into projects such as original video programs and delivery drones.

User comments : 0

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.