NASDAQ Will Pay Financial Firms for Facebook IPO Hiccups
For a brief period following Facebook's disastrous IPO, the NASDAQ itself was one of the few companies to make money on it, but now the exchange has agreed to pay out $40 million to financial firms, including the $10.7 million it made on the launch.
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It's a sharp change of course for NASDAQ, which last week was still being combative with those accusing it of bungling Facebook's debut with technical difficulties. "Nasdaq's response amounted to a members-only call with one of its executive vice presidents, a statement that the exchange would set aside a pool of $13.7 million to accommodate losses, and a brief mention of Facebook during the company's shareholders meeting," Reuters' John McCrank reported on Friday. But on Wednesday NASDAQ OMX Group announced deeper concessions meant to actually assuage, The Wall Street Journal's Doug Cameron reported:
Nasdaq said it would pay $13.7 million in cash to member firms that suffered losses, including the $10.7 million profit it made from first-day trading and the maximum $3 million allowed by regulators to make good for trading snafus.
The rest would come in the form of trading discounts seen vesting over six months, with the push to pay out more than the $3 million cap set by regulators raising concerns among rivals that it would set an unwelcome precedent.
The exchange is still getting off easy. Financial firms said they had lost more than $100 million on the launch thanks to NASDAQ's glitches.
