Causing a major setback to
Nasdaq OMX Group Inc.
) slammed its compensation plan for firms, who suffered losses
worth millions during
) muddled initial public offering (IPO), according to media
Nasdaq offered to pay $62 million for the glitches in the
Facebook IPO and asked the firms who would receive the compensation
to forgo their right to chase the exchange for the losses they
suffered. This has been criticized severely by Citi and UBS AG.
Letters have been sent to the Securities and Exchange Commission
by Citi and UBS and some others, who slammed the compensation plan
and charged Nasdaq on several grounds.
UBS has rebutted Nasdaq's compensation plan, claiming that it is
insufficient compared to the huge losses that have resulted from
the exceptional failure on Nasdaq's behalf. UBS estimates its loss
from the Facebook IPO to be at $356 million.
It blamed Nasdaq for the severe stress on its retail marketing
system. Also, UBS demanded an expansion of the types of claims for
losses on trading eligible for compensation. Moreover, Nasdaq's
proposal that the beneficiaries of the compensation plan need to
take back or refrain from other legitimate claims against Nasdaq,
is also being cited as unfair by UBS.
On the other hand, Citi also challenged Nasdaq's compensation
plan. It blamed Nasdaq for gross negligence and said that the
compensation offered would only cover a small part of its total
losses. Notably, Citi is said to have lost $20 million for the
botched up Facebook IPO.
Nasdaq has also been criticized by Citi, owing to its immunity
against liabilities as it holds the position of both an exchange as
well as a regulatory body. Citi claimed that Nasdaq should not
enjoy the immunity for its regulatory status in this case because
of its negligence, which resulted in losses worth millions by the
market participants in the Facebook IPO, occurred when it was
operating for profit and not for regulatory motives.
While Citi and UBS as well as some others have criticized
Nasdaq's compensation plan, Citadel has voted in favor of the
proposal and asked SEC for its approval.
We believe that the wrongdoers should be adequately penalized
and the sufferers should receive due compensation. If Citi, UBS and
others who stand against Nasdaq's proposed compensation plan can
defend their case before authorities, then it can help recover
their losses. In fact, an apt judgment in this case should be meted
out in order to avoid similar incidences in the future.
CITIGROUP INC (C): Free Stock Analysis Report
FACEBOOK INC-A (FB): Free Stock Analysis Report
NASDAQ OMX GRP (NDAQ): Free Stock Analysis
UBS AG (UBS): Free Stock Analysis Report
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