Nasdaq expresses regret over Facebook IPO

The exchange would have delayed the offering had it known just how bad its own technical problems were, a senior official says.

Trading in Facebook shares began Friday on Nasdaq -- after a 30-minute delay. Sarah Tew/CNET

Nasdaq would have delayed Facebook's IPO to address technical problems had it known the extent they would affect its trading system, a senior official for the exchange told customers today.

Eric Noll, Nasdaq's head of transaction services, said the exchange "by no means would have gone forward" with the much-anticipated offering had it known problems would disrupt a "normal trading day," according to an account of the conference call reported by the Wall Street Journal.

"In retrospect, it was incorrect," Noll said of the decision to proceed with the blockbuster offering after a 30-minute delay in the IPO's opening contributed to confusion among traders. Traders complained they were not able to confirm changes or cancellations made to Facebook orders starting as early as 4:30 a.m. PT. Later on in the morning, some traders said they had not received confirmation from Nasdaq that transactions had actually been completed.

"My intention was to make clear that we believed we had a good solution in place, and that if we had known that our solution was inadequate, we would have fixed the issue with the right solution before going forward," Noll said in a later statement to CNET.

Angry traders and investors are demanding the exchange compensate them for any losses incurred as a result of the glitch. ( One investor has already sued Nasdaq in a stab at launching a class-action suit.) Noll, however, said he can't promise that customers will be compensated.

"We don't ultimately know whether everyone will get a dollar on the dollar," he said, noting that any payouts would require the approval regulators and Nasdaq's board of directors.

The revelations come on the heels of Nasdaq's admission Sunday that Facebook's IPO on Friday " was not our finest hour " and that it was "humbly embarrassed" by the problems.

Bloomberg reported Friday that the SEC will review Nasdaq's performance in regards to trading of Facebook shares. However, the news service noted that the commission "routinely" conducts such reviews.

A Maryland investor filed a lawsuit today against Nasdaq over its mishandling of the IPO, claiming that investors lost money because the exchange failed to process buy, sell, and cancellation orders in a timely fashion.

Nasdaq officials have also said that the exchange is planning to redesign its IPO systems in the wake of the Facebook IPO, although no further details have been provided.

 

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