Friday, May 25, 2012

Nasdaq set to dish out $100million to financial firms burned by Facebook IPO as tech giant faces legal battle over hidden losses

Claims by four of Wall Street's main market makers against Nasdaq over Facebook's botched IPO are likely to exceed $100million, as they and other traders continue to deal with thousands of problems with customer orders.

A technical glitch delayed the social networking company's market debut by 30 minutes on Friday and many client orders were delayed, giving some investors and traders significant losses as the stock price dropped.

The exchange operator is facing lawsuits from investors and threats of legal action from brokers.

Four of the top market makers in the Facebook IPO - Knight Capital, Citadel Securities, UBS AG and Citi's Automated Trading Desk - collectively have probably lost more than $100million from problems arising from the deal, said a senior executive at one of the firms.

Knight and Citadel are each claiming losses of $30million to $35million, potentially overwhelming a $13 million fund the exchange set up to deal with potential claims. Read More