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.
UBS said 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 losses.”
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 plan.
The Swiss 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 trading loss.