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".

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

Derek du Preez

IDG News Service
Comments are now closed.

Latest News Articles

Most Popular Articles

Follow Us

GGG Evaluation Team

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell

LIFEBOOK UH574

The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi

STYLISTIC Q702

The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott

STYLISTIC Q702

My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Resources

Best Deals on GoodGearGuide

Compare & Save

Deals powered by WhistleOut
WhistleOut

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?