Nasdaq offers $40m to cover Facebook losses

By AGENCIES

FACEBOOK investors caught up in the company's chaotic first day of trading will receive a "one time" compensation sum totalling $40m (£25.8m), Nasdaq said on Wednesday.

Motherhood turns women into compulsive Facebook followers, according to a study that has found their use of the social networking site increases after childbirth.

Under the plan, investors who attempted to buy the company's shares at $42 or less, but whose orders were not executed, would be eligible for compensation.

After approval by regulators, Nasdaq said that it had agreed to pay $13.7m to its affected member firms and the balance would be credited to members to reduce trading costs, with all benefits expected to be awarded within six months.

"Our expectation is that every firm will receive some measure of cash and that every firm will receive their full accommodation by year end if current trading patterns persist," Eric Noll, executive vice president for transaction services at Nasdaq OMX, said in a webcast.

Robert Greifeld, Nasdaq chief executive, told the Wall Street Journal that Nasdaq "owed the industry an apology" for the technical glitches that marred Facebook's IPO last month.

However, the compensation falls short of the losses claimed by top market makers for the company's IPO, and Knight Capital, one of the main market makers in Facebook's IPO, branded Nasdaq's offer of compensation "simply unacceptable".

“Clearly, we are disappointed that Nasdaq’s compensation fund does not come close to covering reported losses from broker-dealers like Knight who traded Facebook shares on behalf of average investors the day of the IPO, and who suffered losses as a result of Nasdaq’s failures in connection with this IPO,” it said in an e-mailed statement.