Regulators cleared Nasdaq OMX Group Inc.’s plan to pay $62 million to compensate brokers for its mishandling of Facebook Inc.’s public debut, dealing a defeat to Wall Street firms that say they lost many times that amount.
The Securities and Exchange Commission approved Nasdaq’s request to change its rules and expand the compensation pool for member firms in the May 18 initial public offering. The funds will go to traders who lost money after a design flaw in the exchange’s computers delayed Facebook’s open and left traders confused about how many shares they owned.
The proposed plan is “inadequate to address the magnitude of Nasdaq’s unprecedented failures,” UBS told the SEC in a letter on Aug. 22. The bank entered multiple orders for Facebook shares because it didn’t receive confirmations, leading to losses of more than $350 million, UBS said. It asked the SEC to work with Nasdaq to reformulate the proposal to increase the amount paid and cover a broader range of trading losses.