NASDAQ fined US$10 million over Facebook IPO

NASDAQ, the American stock exchange that oversaw the hectic initial public offering (IPO) of Facebook in May last year, has been fined a record US$10 million for its part in the event.

The fine is the highest ever levied against any stock exchange and is the result of failures within NASDAQ’s computer programmes and “poor systems and decision making” both before and after the IPO of the world’s biggest social network.

The Securities and Exchange Commission (SEC) released the results of its investigation yesterday (Wednesday) after accusations NASDAQ had violated the rules of an IPO.

The New York Times reports during the IPO on May 18, 2012, at least one trader, Knight Capital, had emailed the stock exchange’s executives to ask for a temporary pause in trading.

The message read: “We are all trading blind… Should you stop trading for some period of time so we can all catch up and actually understand our exposure?”

Daniel Hawke, head of the SECs market abuse unit, said NASDAQ should not write off such incidents simply as “technical glitches” and added: “It’s the design of the systems and the response of exchange officials that cause us most concern.”

As well as the fine, NASDAQ has agreed to pay US$62 million to traders who lost money because of the problems, though the UBS firm claims it lost US$356 million because of NASDAQ’s errors.

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