The social media giant was plagued with technical problems on its first day of trading, marring it's highly anticipated stock offering last month. Computer glitches at the Nasdaq delayed the opening of trading by half an hour and kept some investors from buying shares in the morning, selling them later in the day, or even from knowing whether their orders went through.
Some investors complained they were left holding shares they didn't want.
Nasdaq have announced plans to hand out $40m in cash and credit to reimburse investment firms that got ensnared by computer glitches and lost money, but the mea culpa from Nasdaq's CEO Robert Greifeld was met with a chorus of jeers and boos on Wall Street.
One casualty broker, Knight Capital said the planned reimbursements weren't nearly enough to cover the losses, encapsulating the complaints that other brokers and investment firms were making privately. The firm claims it lost up to $35m as a result of not receiving trading confirmations.
“Nasdaq's proposed solution to this problem is simply unacceptable. We are evaluating all remedies available under law,” Knight said in a statement.
Total claims from brokers, including lead underwriter Morgan Stanley, are said to mount to more than $100m. Nasdaq has said it was embarrassed by the glitches, and said they “owe the industry an apology” for the problems. It will reimburse investment firms that tried to sell shares at $42 or less but either couldn't sell or sold at a lower price than intended. FINRA, the financial industry's self-regulatory group, will also review claims for compensation.
The NYSE, condemned the move, saying the company was giving itself an unfair advantage and rewarding itself for its own mistakes. Many also think that Facebook as well as Morgan Stanley, the main bank that underwrote the deal, priced shares too high and issued too many of them, are also to blame.
Facebook stock originally priced at $38, closed that first day at $38.23, a disappointment to speculators who had hoped for a first-day trading bang. Investors have seen a $31bn fall in market value since its 18 May float, a record amount for a new issue in its first month. The stock closed Wednesday at $26.81 down 29 percent from its $38 initial offer price.