The Nasdaq stock exchange announced a $40 million fund on Wednesday to reimburse investors who were “disadvantaged” by technical malfunctions during Facebook’s highly anticipated IPO on May 18. The Nasdaq OMX Group reported an accommodation program will pay qualifying member firms with cash or trading discounts in an effort to renew its reputation after a technical glitch bemused investors regarding their trading orders.
According to Nasdaq, IPO orders that qualify for the program are those that were “directly disadvantaged due to a clear error on the part of Nasdaq” and the member had specific “uncertainty” about their order. No orders entered after 11:30 a.m. will be considered as part of the review process, said Nasdaq Executive Eric Noll. “I would also like to make clear that this is a member firm accommodation policy because we have only the relationship with our member firms, not with brokers or investors or people who are customers of our member firms,” Noll said. “We are only in a position really to discuss accommodations to those member firms, not beyond that.” The Nasdaq board decided on the amount of $40 million for the voluntary accommodation fund with factors such as Nasdaq’s estimated $7 million Facebook-related revenues over the next five years and the $10.7 million profit made on the first day of trading. In what was the largest tech offering in history, Facebook’s IPO has been one of the worst-performing in decades. The billion-dollar social network’s shares are down 33 percent from their first-day closing price to a low of $26.
