As the problems in Facebook's opening day trading surfaced, Nasdaq CEO Robert Greifeld didn't know it was happening, the Wall Street Journal reported today (subscription required).
The articles provides a play-by-play of the stock exchange's system breakdown on May 18, when banks and firms lost millions of dollars as order confirmations failed and then a wave of panicked cancellations jammed the system. It also notes that Nasdaq shortened Facebook's waiting period to join the index to just three months, according to an unnamed WSJ source. The wait can normally take as long as two years.
Greifeld flew out to Silicon Valley on May 18 to witness the remote ringing of the market's opening bell and after the opening was delayed for 30 minutes, he thought the glitches were over.
So, as the Nasdaq was flooded with frustrated calls from investors and a wave of cancellations, Greifeld was on a five-hour flight back to the East Coast with a phone that didn't work and no Internet access, he told the WSJ.
Upon investigation, Nasdaq found ain the systems that caused the problems. Nasdaq computers were overwhelmed in part because investors were able to submit orders until Facebook opened, rather than briefly halting the flow during the lineup of the trades, Greifeld told the WSJ.
Although the Nasdaq has submitted a, firms and investors who lost money -- the figure has now grown to about $500 million, the WSJ reported -- over the IPO, have said it's .
The Knight Capital Groupits losses are between $30 million and $35 million, while investment bank from the IPO and was planning to sue. UBS did not confirm the information, and the WSJ said exchange officials have told analysts that Nasdaq is protected from lawsuits.
The SEC is investigating whether financial forecasts and other data Facebook gave to bankers were properly reflected in what bankers told their clients ahead of the $16 billion stock sale, according to unnamed WSJ sources. Additionally, the SEC will determine if Nasdaq withheld information about computer-system problems that would have led to postponing the trading beyond the 30-minute delay.