Nasdaq is reportedly set to compensate investor losses following computer glitches that tarnished trading on the first day of Facebook’s $US16 billion IPO, according to a news report.
The Wall Street Journal reports that Nasdaq OMX Group, which operates the Nasdaq exchange, has told brokers that it expects to submit plans on the issue to the Securities and Exchange Commission on how it might make up losses tied to its systems problems.
Trading orders on the first day that Facebook shares hit the market on May 18 overwhelmed Nasdaq’s systems, forcing a length delay in trades and leaving investors and brokers in the dark over the results of orders involving millions of shares.
Claims of losses related to Nasdaq’s problems are estimated above $US100 million, according to the Journal.
On May 24 New York broker Knight Capital asked Nasdaq to compensate it for up to $US35 million on the IPO.
“As has been well-publicised, there were numerous issues and problems at Nasdaq relating to the trading of Facebook. Some market participants, including the Company, suffered sizable losses,” Knight said in the filing.
The claims are well over what the exchange group has available — $US13 million, according to the report — to compensate traders who suffer losses due to problems with Nasdaq’s system.
In addition at least one class-action lawsuit has been filed in New York against the exchange over claimed losses on Facebook shares due to the systems problems.
Shares in the social network – which began at $38 – have since plummeted more than 30pc.
Nasdaq executives have previously indicated that they will use $10.7m gained from the the group’s own unexpected position in Facebook shares on the day of the IPO, adding to Nasdaq’s standing $3m cap on compensation payable to exchange customers that lose money due to system outages.
The news comes after Facebook founder Mark Zuckerberg was sued by shareholders over the IPO.
The lawsuit accuses Mr Zuckerberg, Facebook and several banks led by Morgan Stanley of hiding the company’s weakened growth forecasts ahead of its $16bn initial public offering.
Facebook shares fell a further 3.8pc on Tuesday to close at $25.86.
