The technology glitch during Facebook’s IPO that delayed things for 30 minutes on Nasdaq prevented many orders from being included in the opening cross. Companies like Knight Capital Group Inc, UBS AG, Citigroup Inc, and others claim a collective loss near $500 million.
Originally, Nasdaq offered a peace offering composed of a $40 million compensation plan for brokers who lost money, but later revised the amount to $62 million. However, those who suffered loss, claim the amount is too low. According to market-makers, the delay in confirmations during the Facebook IPO led to delays for many clients and in some cases orders were entirely lost.
The Dodd-Frank law empowering the SEC to review rule changes filed by exchanges has a limitation window of 45 days, which would have ended on October 30, but by posting its notice for instituting investigation of Nasdaq’s plan on Tuesday, the SEC remains in the game.
The SEC said that it has received many complaints about the manner by which Nasdaq’s plan created and limited categories eligible for the settlement and compensation. The SEC would be reviewing Nasdaq’s method for determining eligibility for compensation and the requirement for member firms to waive all claims against Nasdaq pursuant to agreeing for settlement.