duvallroberte: SEC approves Nasdaq?s Facebook compensation plan

Tuesday, 26 March 2013

SEC approves Nasdaq?s Facebook compensation plan

By Ronald D. Orol, MarketWatch

WASHINGTON (MarketWatch) ? The Securities and Exchange Commission has approved Nasdaq?s plan to distribute $62 million to those hurt by the botched initial public offering of Facebook.

The SEC said while the proposal wouldn?t compensate all claims of loss suffered relating to system difficulties, it would provide ?significantly more compensation? than would otherwise be available.

Mark Zuckerberg, chief executive officer and founder of Facebook Inc., speaks during an event at the company's headquarters in Menlo Park, California, U.S., on Thursday, March 7, 2013.

At issue is Facebook?s /quotes/zigman/9962609/quotes/nls/fb FB -2.16% ? much anticipated May 18 IPO, which had a delayed debut after the Nasdaq /quotes/zigman/86035/quotes/nls/ndaq NDAQ +0.31% ?stock exchange experienced technical glitch while trying to get trade confirmations to brokers. Read about how Facebook's IPO gets a rocky open

The SEC noted in its decision that several groups objected to limiting compensation, with market makers reportedly seeking more than $200 million.

Commentators also raised concerns about the amount of compensation that would be provided to Nasdaq members, and how the payments were calculated. Read the SEC rule

According to the SEC order, Nasdaq will compensate victims based on four categories of orders, including one category of orders that were submitted between 11:11 a.m. and 11:30 a.m. on May 18 that ?did not execute.?

Firms receiving payment as part of the measure are required to release any claims against Nasdaq associated with the Facebook IPO. One commentator said such a release as a precondition to participation creates a ?fundamentally unfair dilemma.?

The SEC added that the Nasdaq has set up an objective and transparent method for awarding claims.

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