Nasdaq seeks dismissal of class-action suits over Facebook IPO
The stock exchange argues that it cannot be sued via class-action suits because of its legal status as a self-regulatory organization.
The Nasdaq stock exchange has requested that a U.S. District Court judge in Manhattan throw out a group of class-action lawsuits charging the organization with violation of securities laws on the Facebook IPO.
In a brief filed Monday before U.S. District Court Judge Robert Sweet, Nasdaq said it couldn't be sued by consolidated class actions because of its legal status as a self-regulatory organization. As such an organization, Nasdaq argued, it cannot be sued for actions it took as part of its standard "regulatory functions." To bolster its case, Nasdaq also argued that the claim of its negligence was not enough for the lawsuit to proceed. The judge has yet to rule on Nasdaq's contention.
Bloomberg was first to report on this story.
The botched kickoff of the Facebook IPO last year pushed back the start of trading and ultimately created trading errors. Investors and traders who lost funds in the initial transaction sued Nasdaq, claiming it was negligent in its handling of the IPO.
For its part, Nasdaq has not acknowledged negligence. Earlier this year, the organizationto settle claims brought against it by the Securities and Exchange Commission over the regulatory body's charges that Nasdaq had "poor systems and decision-making" on the day of the IPO. The SEC did not, however, force Nasdaq to admit wrongdoing or negligence.
Still, Nasdaq has tried to express regret over the botched IPO. After the IPO, Nasdaq said that it was "humbly embarrassed" by the trading troubles on that day, adding it was "not our finest hour."