Nasdaq announced that it would pay out $40 million in compensation to investment firms who lost money on Facebook’s opening day on the market.
Facebook’s launch was marred with technical problems, trading was delayed by about half an hour and some brokers reported that Nasdaq failed to execute orders on time, or provide them with timely feedback.
Nasdaq had previously established a $3 million compensation cap for technical glitches, but due to the scale of the Facebook rollout it had to go around its own rules and offer $40 million.
However, some brokers and punters believe Nasdaq’s kind apology and $40 million are nowhere near enough.
Knight Capital told the Sydney Morning Herald that it alone lost $35 million and obviously they are not alone. The Wall Street Journal estimated that total Facebook IPO losses could amount to $100 million and the New York Stock Exchange was quick to fire off a statement critical of Nasdaq, claiming that Nasdaq was practically awarding itself for the glitches and setting a harmful precedent.