Nasdaq Hopes to Appease Facebook Investors with Modest CompensationBy: Drew Bowling - June 5, 2012
The Nasdaq OMX Group hopes to make up for that small-but-disastrous glitch on the day of Facebook’s initial public offering by compensating affected investors who were trying to get in on the early trading. According to the Wall Street Journal, the exchange organization has been notifying brokers that it plans to submit the proper filings tomorrow in order to begin the process of compensating investors.
Nasdaq’s technical fumble delayed the IPO for about half an hour and left brokers wondering whether or not their trades had actually been confirmed. Some of those traders didn’t find out until hours later whether their purchases went through, which was well after it was starting to look like Facebook’s stock was stalling.
Today’s new low for Facebook shares, $25.75, likely only adds kindling to the fiery anger felt by brokers who were unexpectedly and unwittingly left holding Facebook shares that they likely wouldn’t have kept if they’d have known what the actual fate of their share purchases were.
Nasdaq OMX plans to use roughly $10.7 million that was gained from the organization’s “own unexpected position in Facebook shares” in addition to the standing $3 million cap on compensation reserved for exchange customers negatively affected by system outages. That may be about as far as Nasdaq cares to go in ameliorating the toxic situation investors find themselves in, though, because if the group doles out much more than that it could start to eat into their profits. That seems like shoddy, selfish math guaranteed to prolong the bitter taste in the mouths of investors should that $13 million not cover the losses suffered by investors.
And bitter they may continue to be, as the Journal points out that total losses suffered on behalf of retail investors lost more than $100 million due to the craptastic Facebook IPO. Nasdaq might want to start brokering some peace with investors tomorrow, but paying out only a tenth of what was lost because of Facebook’s IPO errors likely won’t appease too many investors.