Arab Today, arab today nasdaq hikes payout figure for botched facebook ipo
Last Updated : GMT 02:28:27
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Nasdaq hikes payout figure for botched Facebook IPO

Arab Today, arab today

Arab Today, arab today Nasdaq hikes payout figure for botched Facebook IPO

San Francisco - AFP

Nasdaq 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, 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. "We have learned from this experience and we will continue to improve our trading platforms." Nasdaq in June 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. "After careful analysis, the program has broadened the eligibility by adding a new class of orders to be accommodated in addition to the three classes that were announced in June," Nasdaq said. Modifications to the program included priority accommodation for customers of Nasdaq members and making payouts in cash instead of trading credits as originally proposed. The filing of the proposed plan with US regulators marked the start of a seven-day comment period during which traders can express their views. 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 nearly 30 percent from the IPO, slipping to $28.71 in after-hours trading Friday. The plan requires the approval of the Securities and Exchange Commission, and the independent Financial Industry Regulatory Authority will evaluate claims from the brokers, Nasdaq said. 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. Claims of losses related to the market's computer problems are estimated above $100 million, according to The Wall Street Journal. The glitch dealt a black eye to the exchange, which trades some of the world's largest companies, including Apple and Microsoft. It also sparked reports that the NYSE was trying to woo Facebook away from Nasdaq.

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