UBS to pursue legal action over Facebook IPO
UBS will seek
legal action against Nasdaq OMX after revealing a CHF 349 million (US$350
million) quarterly loss in its US equities business that was mainly driven by
the botched Facebook IPO.
several operation failures had occurred at Nasdaq OMX, which delayed pre-market
orders for several hours that were only confirmed after being submitted
multiple times. Nasdaq OMX filled these multiple orders, which led to UBS
buying more shares than clients had ordered.
In its second
quarter report released on 31 July, UBS indicated it would forego any compensation
package offered by Nasdaq OMX and begin legal proceedings to recoup losses.
“We will take
appropriate legal action against Nasdaq to address its gross mishandling of the
offering and its substantial failures to perform its duties,” read the results statement. “We intend to pursue compensation for the full extent of our
The first day of trading
in Facebook’s stock was delayed for around 25 minutes because of an error that prevented
Nasdaq OMX from creating an opening price, leaving many investors in the dark
as to whether their orders were completed and at what price they were executed.
A controversial plan
to offer discounted trading fees on Nasdaq OMX to firms affected by the IPO
glitch was scrapped last week in favour of cash-only compensation from a fund
of US$62 million.
Nasdaq OMX will refund members if, during the Facebook
IPO, cross sells priced at US$42 or less did not execute or executed at an
inferior price, or if buys executed were not adequately confirmed. Buys that
executed but were not confirmed and were attempted to be cancelled have also
been added as a class of order eligible for reimbursement under the revised
global financial services company reported an overall pre-tax loss of CHF 130
million in the second quarter of 2012, largely impacted by the US equity