Banks, brokers slam Nasdaq's Facebook compensation plan as 'inadequate'

Market-players who lost millions of dollars in Facebook's botched IPO call Nasdaq’s $62 million compensation plan "inadequate to address the magnitude of Nasdaq's unprecedented failures".

Citi Group and UBS Securities have written letters to US regulators stating the amount of money they lost because of Nasdaq’s technical glitch, writes Reuters. "Simply put, Nasdaq's proposal to pay $62 million in the aggregate for all Facebook-related claims is woefully inadequate," UBS said in the letter to the US Securities and Exchange Commission (SEC) dated August 22.The letter is one of nine that market makers, brokers and lawyers posted on the SEC's website on Thursday.UBS said it alone lost over $350 million due to a delay in order confirmations during the May 18 IPO. Because of these malfunctions UBS's systems had to go through multiple reentries that left it with a huge position of unwanted stock.Citibank also sent a letter to the SEC saying it has lost around $20 million in the IPO and called Nasdaq actions "gross negligence."UBS said claims for trading losses Nasdaq agreed to compensate "should be expanded to include the full extent of losses caused by Nasdaq.”Broker-dealers have also said in US Securities and Exchange Commission filings that Nasdaq’s compensations plan “does not go far enough.”Major market players lost over $500 million in the $16 bln IPO. Nasdaq's systems initially delayed the offering. So when trading started at an opening price of $42, many investors were left in the dark for more than two hours.Many buy and sell orders did not actually go out until later in the day, while others, were lost altogether.