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Citigroup Inc. (NYSE:C) finally went public on its frustration with the NASDAQ exchange operator, NASDAQ OMX Group Inc’s  (NASDAQ:NDAQ) handling of the Facebook Inc (NASDAQ:FB) IPO in May, and the subject of compensation for the botched trades during that IPO.

According to a report in the WSJ, Citigroup Inc. (NYSE:C) has written to the SEC that the exchange ignored technical problems and went ahead with the IPO in a “hasty” and “self-interested” manner, and that its actions resulted in losses of hundreds of millions of dollars to market participants. In Citi’s view this was “grossly negligent conduct.”

Citi also charged in its letter that the compensation of $62 million, offered by the exchange, was totally inadequate and that it would cover only a small fraction of the aggregate claims for losses. According to sources, Citigroup Inc. (NYSE:C) may have lost as much as $20 million in the ill-fated trading session.

Citi said in its letter:

“In short, NASDAQ’s reckless, profit-oriented decision to open trading despite system malfunctions, insufficient failover procedures, and a known design flaw, resulted in rampant confusion and further system failures, not, as NASDAQ claims, ‘active, deep, and liquid trading.”

According to estimates, market functionaries lost as much as $500 million in the trades’ mishap. UBS itself lost about $357 million from the IPO. According to this report in the Los Angeles Times, UBS AG (NYSE:UBS) has also written to the regulators and protested the Nasdaq exchange move to put a ceiling on the compensation payable at $62 million through the “member accommodation program.”

Citigroup Inc. (NYSE:C) also raises another point that relates to provisions the exchanges have that limit their liability in the event of issues, such as that of the Facebook Inc (NASDAQ:FB) IPO. Such provisions actually operate unfairly. Says Citi: “The public and the markets will be better served if NASDAQ has the threat of liability and thus the incentive to take steps to avoid any single catastrophic event.”

No comments could be obtained from NASDAQ authorities on the subject of the Citi letter.