US stock exchange Nasdaq has received the go-ahead to compensate Facebook investors for losses incurred from the social network's initial public offering (IPO). The stock flotation in May was upset by technical glitches.
A plan to compensate Facebook investors with damages to the tune of $62 million (47 million euros) was finally approved by the United States Securities and Exchange Commission (SEC), US financial market regulators announced.
On May 18, 2012, first trading in Facebook shares was delayed by 30 minutes due to technical glitches, which led to orders not being included in the opening cross and to long waits for confirmations. This reportedly cost investors and traders big losses as the stock price dropped after an initial gain.
Brokerages such as Knight Capital Group, UBS and Citigroup said they had collectively lost around $500 million during the botched IPO.
Nasdaq originally drafted a $40 million compensation plan, but later raised it to $62 million amid criticism that the amount was too low.
SEC made its decision after investigating complaints that Nasdaq had accepted only limited categories of claims and would force claimants to waive additional claims against the exchange operator.
uhe/kms (Reuters, dpa)