Nasdaq Could Be Fined Over Facebook Inc (FB) IPO


NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) is in talks with the Securities and Exchange Commission (SEC) to settle the agency’s ongoing investigation related to the Facebook Inc (NASDAQ:FB) IPO technical glitch that cost Wall Street $500 million.

Nasdaq Could Be Fined Over Facebook Inc (FB) IPO

According to a report from the Wall Street Journal, citing sources familiar with the issue, NASDAQ OMX Group, Inc. (NASDAQ:NDAQ), might end up paying a penalty of $5 million or 1 percent of the $500 million collective losses of Wall Street. In addition, the stock exchange also offered a $62 million payment for trading firms that incurred losses from trades during Facebook Inc (NASDAQ:FB)’s debut.

A spokesperson for NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) said the stock exchange is working with the SEC to resolve its missteps of last May.  The spokesperson said, “We continue to believe we acted appropriately and in the best interest of investors under challenging circumstances and we have volunteered an accommodation plan supported by many exchange members.”

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People familiar with the ongoing settlement talks said the SEC is focused on certain issues including the assumption that Nasdaq has deficiency in controlling its systems, possible sanctions, and the required steps the stock exchange must undertake to avoid similar mistakes in the future. Nasdaq is protected from various legal actions because of its status as a self-regulatory organization.

Some people speculated that a settlement could still be weeks or months away due to the continued request of investigators for additional information over the past weeks. NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) would be the second stock exchange to be penalized by the SEC, if it agrees to accept the settlement proposed by the stock exchange.

The NYSE Euronext (NYSE:NYX) paid a $5 million penalty to settle allegations of the SEC that it provided some customers with market data ahead of others. The parent company of the NYSE did not admit or deny the accusations. The company said the problems related to the timing of the release of market data were caused by “technology issues, not from intentional wrongdoing by the exchange or any of its personnel.”

The SEC has until March 29 to evaluate the settlement proposal, which covers directly attributable system issues experienced by Nasdaq.

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