NASDAQ To Pay $62 Million In Cash For Facebook IPO Debacle
In July 2012, the Nasdaq started to prepare a compensation plan for investors that lost money on the Facebook IPO. When Facebook went public, the company was plagued with technical errors causing their stock price to drop. Now the Nasdaq OMX Group will give funds to brokerages that lost money due to glitches that delayed the debut of Facebook’s shares by half an hour.
Once the stock finally started trading, investors complained that they were unable to confirm changes or cancellations made to Facebook orders starting as early as 4:30AM Pacific time. Some traders did not receive a confirmation from Nasdaq that their transactions had been completed also. The traders demand that the Nasdaq compensates them for any losses that were incurred due to the glitch. The technical glitches is estimated to have costed traders around $500 million.
Even with the $62 million payout, the Nasdaq is still subject to lawsuits and further regulatory action according to the SEC. “We are pleased that the Securities and Exchange Commission has approved our accommodation plan, which will enable our customers, members and market participants to receive appropriate restitution as FINRA promptly begins processing claims,” stated a Nasdaq spokesperson.