Last year NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) during debut of Facebook Inc (NASDAQ:FB) shares the U.S. Securities and Exchange Commission SEC ,a securities regulators authority for regulating the Stock market, has fined the company approximately $500 million for May 18 IPO matter of FB, according to Wall Street.
According to the report, the regulators may seek 1 percent of that from the exchange group as fine.
On the day of Facebook’s IPO, when FB shares started trading, NASDAQ’s systems got caught in a loop. As trading started for FB, its shares was caught up by half an hour plus, during this time NASDAQ failed to display order confirmations to brokers, eventually many of the brokers didn’t know who held what positions. This fault raise a question over his reliability of computer-driven trading.
According to people with knowledge of the discussions from the past few months, Securities and Exchange Commission (SEC) was looking into Facebook’s May 18 IPO matter, on the other side NASDAQ is in opening talks with the SEC over a possible conclusion associated to its substandard managing of FB’s offering.
NASDAQ and FB are discussing a financial penalty of regarding $5m, and NASDAQ has also offered to balance clients $62 million for losses stemming from Facebook IPO trades.
SEC laws and NASDAQ’s individual rules have Rules limit the exchange group’s expenses from the technical short-lived fault in a system. But, combined losses from the initial public offering IPO, and the blow to investors’ confidence, have highlighted the insight of NASDAQ’s potential costs.
The May 18 IPO is the second one in its history of SEC in which the regulatory has fined a stock exchange. And now NASDAQ executives are also keen to put behind them an 8 month investigation.
According to people related to the negotiations with the SEC and NASDAQ’s, NASDAQ’s had lack of control over its systems, authorize the organization might demand, and steps NASDAQ will be required to take to stop future mistakes.