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Nasdaq to pay $40M for Facebook glitches

Published: June 7, 2012 | 7:52 am
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NEW YORK — The Nasdaq stock exchange said Wednesday that it plans to hand out $40 million in cash and credit to reimburse investment firms that got ensnared by technical problems with trading Facebook stock.

FINRA, the financial industry’s self-regulatory group, will review compensation claims.

Facebook went public May 18 amid great fanfare. But computer glitches at the Nasdaq plagued the day. They delayed the opening of trading by half an hour and kept some investors from buying shares in the morning, selling them later in the day, or even from knowing whether their orders went through. Some investors have complained that the technical problems left them holding shares that they didn’t want.

Nasdaq will pay about $14 million in cash to investment companies that file valid claims. The rest will be given as credit for the costs that firms have to pay to trade on the Nasdaq.

Nasdaq didn’t estimate how much it expected to receive in claims, or whether it thought $40 million would cover all the claims. But the amount is more than usual: The company has traditionally imposed a $3-million cap for reimbursing customers who lost money because of technical problems.

The stock originally priced at $38 and closed that first day at $38.23, a disappointment to speculators who had hoped for a first-day pop. Nasdaq has said it was embarrassed by the glitches, but that they didn’t contribute to the poor first-day returns.

Nasdaq says it will reimburse investment firms that tried to sell shares at $42 or less but couldn’t sell or sold at a lower price than they intended. It will also reimburse investment firms that bought at $42 but whose trades weren’t immediately confirmed.

Shares went as high as $45 on the first day but haven’t returned anywhere near that.


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