Nasdaq May Pay $5M Fine for Troubled Facebook IPO

By Ed Silverstein February 06, 2013

Nasdaq OMX Group may pay a $5-million fine for last year’s problem-plagued Facebook IPO.

The amount is far less than the approximately $500-million loss seen by four brokerage firms that resulted from the May 18 initial public offering.

The Wall Street Journal reports that the stock exchange is in preliminary talks with the Securities and Exchange Commission (SEC) over a potential settlement.

It would represent only the second time that the SEC has fined a stock exchange. Last year, the New York Stock Exchange paid a $5-million fine.

In addition, Nasdaq may give customers $62 million to compensate for the losses related to the IPO. That proposed amount still needs to get approval from the SEC.

Among the problems with the IPO was the half-hour delay in the opening of trading for Facebook shares. There were also some three hours in delays for order confirmations being sent out to brokers. There was a lot of confusion among both investors and brokers that day as well.

Some orders apparently were just plain lost, according to TechZone360.

It appears the SEC remains concerned that current computer-based trading needs to be better controlled. Nasdaq was investigated for eight months about the circumstances surrounding the IPO, and many industry watchers want to see them held responsible.

"Why should the banks and brokers be left holding the bag for Nasdaq's snafus?" Scott Saks, a lawyer at Paul Hastings, asked in a statement made to The Journal.

The exchange is cooperating with regulators. “We’re working closely with the SEC to resolve the issues that arose from the events on May 18,” Joseph Christinat, a spokesman for Nasdaq OMX, said in a statement carried by Bloomberg Businessweek. “We continue to believe we acted appropriately and in the best interest of investors under challenging circumstances and we have volunteered an accommodation plan supported by many members.”

However, New York Stock Exchange CEO Duncan Niederauer claimed last year that market confidence was hurt by the Facebook IPO. Many concerns were also raised by members of Congress over the botched IPO.




Edited by Braden Becker

TechZone360 Contributor

SHARE THIS ARTICLE
Related Articles

Samsung's Bixby Assistant and Apple's AR Plans Bode Well for AI

By: Laura Stotler    3/24/2017

Samsung's announcement of its new Bixby virtual assistant on the Galaxy S8 phone and Apple's augmented reality (AR) development plans point to excitin…

Read More

What is IBM Watson Adding to the Practice of IT?

By: Doug Mohney    3/23/2017

I have seen the future of IT, but have yet to fully understand it. IBM's Watson cognitive computing push is going to drastically reshape how IT is run…

Read More

API Management Poised for Big Growth

By: Paula Bernier    3/22/2017

The API management market is forecast to be worth $2.665 billion by 2021, according to MarketsandMarkets. That's up from more than $606 million last y…

Read More

IBM Watson Aims to Improve Call Center, IVR CX

By: Paula Bernier    3/22/2017

At its IBM Interconnect event today, the tech giant is introducing the IBM Watson Voice Gateway. It can act as a cognitive self-service agent, directl…

Read More

The 3D Printer That Could Print Your Next House or Finish Trump's Wall in Two Months

By: Rob Enderle    3/21/2017

Not only could this 3D printer be used to rapidly rebuild a town devastated by a natural or manmade disaster, the resulting home could be better able …

Read More