Facebook to shed light on Nasdaq glitch

The exchange has received harsh criticism for its handling of the social networking giant’s much-anticipated IPO

Facebook is set to file a motion to consolidate all the shareholder lawsuits against it, which may shed some light on the severity of Nasdaq's technical glitch on the social networking site's IPO.

The lawsuit alleges that Facebook executives, including Zuckerberg, CFO (chief financial officer) David Ebersman and underwriter Morgan Stanley, intentionally hid negative views of the company's revenue growth potential prior to floating.

According to the New York Times, the motion, which may be filed in the District Court for the Southern District of New York today, will provide some perspective on Nasdaq's role on the day of Facebook's IPO.

Sources familiar with the matter said that the motion will shed light on the effect the exchange's actions had on the stock's trading activity.

The IPO was riddled with technical problems, which led to a delay of 30 minutes. The problem stemmed from Nasdaq's IPO Cross, a pre-IPO auction process that the exchange put in place in 2006 that allows traders to place orders and agree on an IPO price before the stock is officially launched, which couldn't handle the trading demand.

Facebook's initial IPO was priced at $38 a share, but this leapt up to $45 in the first few hours after trading, and has since declined up to 30 percent.

Nasdaq has earmarked $40 million (£26 million) in compensation for financial firms that suffered losses during the IPO, which will largely be made up of discounted trading fares. However, the payback plans have received harsh criticism, where some trading firms have said that the $40 million is a fraction of the hundreds of millions lost in the moments following the flotation.

Furthermore, operating rival New York Stock Exchange (NYSE) has released a statement claiming that if the discounted trading fees plans are approved, this would result in unfair practice and equates to the industry subsidising Nasdaq's mistakes.

"We believe it would be wholly inconsistent with fair practice and an undue burden on competition to allow Nasdaq to use pricing and other machination as a guise for fairly compensating those impacted by the Facebook IPO issues," said NYSE.

"Such a tactic would potentially strongly incentivise customers to divert order flow to Nasdaq in order to receive compensation to which they are entitled, and allow Nasdaq to reap benefit from market share gains they would not have otherwise received."

NYSE believes that this would establish a "harmful precedent that could have far reaching implications for the markets, investors and the public interest".

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Derek du Preez

IDG News Service
Show Comments

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?