Bookmark and Share

NASDAQ Fined $10 Million for Facebook IPO Mishandling (FB, NDAQ)

In what would be a largest ever fine levied on the U.S. Stock Exchange, NASDAQ’s parent company, NASDAQ OMX Group Inc. (NASDAQ: NDAQ) has been asked to pay $10 million by the Securities and Exchange Commission (SEC) for a botched IPO of social networking giant Facebook (NASDAQ: FB).

The NASDAQ stock exchange was penalized for its “poor systems and decision making”

SEC, which investigated the case, said on Wednesday that NASDAQ sullied several rules before and after the I.P.O. of Facebook.

Moments after Facebook went public, the whole system at NASDAQ turned haywire with executives at Stock exchange receiving an e-mail, requesting for a pause.

According to the dealbook/NY Times, people familiar with the matter said that the NASDAQ executives received a message from the Chief Executive of a trading firm, Knight Capital on May 18, pleading, “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?”

The disorder seen on the morning of May 18, 2012 was attributed to errors in the Stock exchange’s computer programming.

However, NASDAQ executives did pay any heed to the chaos caused by the error in the computer system and simply went on with trading, adding to more confusion.

With this settlement, NASDAQ can now take some sigh of relief as the botched IPO tarnished its reputation and investors’ faith, badly. Nonetheless, NASDAQ’s mishandling of the situation was not just confined to computer-system glitch; it was beyond that…the manner in which executives at the Stock Exchange responded.

In a statement released, SEC’s head of market abuse unit, Daniel M. Hawke said, that in such situations (Facebook IPO like incidents), there is tendency to set aside the whole episode by blaming it on “technical glitches”.

“It’s the design of the systems and the response of exchange officials that cause us the most concern,” said Hawke.

Leave a Reply




You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

All stories in are for informational purposes only. This is NOT a stock recommendation. This story is a daily light analysis featuring a stock with insider buying. With some caveats, insiders purchase a stock because they think the stock is going up. There are other factors to consider such as size of the transaction relative to their compensation and net worth. Sometimes, insiders might be propping a stock price up for future financing. Sometimes, the amount of insider buying are misread or misreported. Each month, DailyStocks releases a a summary of the stocks with insider buying. Sign up for the free monthly newsletter at . About is the place where you can find stories about stocks with insider buying, where you can educate yourself about stock market investing, and where you can perform the stock search engine analysis – you enter a stock symbol, and you get a resulting page of stock ticker indexed links so that you do not have to type the stock symbol each time.