Nasdaq Plan Approved By The SEC

Nasdaq Plan Approved By The SEC

The Nasdaq plan of paying trading companies $62 million for losses they incurred during the failed public offering of Facebook (NASDAQ:FB) was approved by the Securities and Exchange Commission.

The combined losses of four major trading companies reached $500 million. Technical issues in at the Nasdaq resulted to the losses to Citadel, Citigroup (NYSE:C), UBS (NYSE:UBS) and Knight Capital (NYSE:KCG) during the initial public offering of Facebook. Although the Nasdaq plan will not cover all the losses of the companies, the SEC indicated that it offers a way for companies to be able to acquire better compensation through claims that may be available in the future.

If the plan was rejected by the SEC, the compensation to the trading companies would have been limited to around $3 million, basing on existing rules of the SEC.

UBS, which indicated earlier that the Nasdaq plan was insufficient and inadequate, lost over $350 million. The trading company pointed out that it has not changed its opinion on the plan following the approval given by the SEC. The company said that it already filed an arbitration claim for the entire amount. The losses were mainly due to the serious mishandling of the IPO by the Nasdaq.

Citi did not release any statements in connection to the approval given by the SEC to the plan of Nasdaq. Earlier, the company point out that the proposal was not sufficient and it should not be accepted.

On the other hand, Citadel and Knight supported the plan of Nasdaq. John Nagel, the general consul and managing director of Citadel, called the plan, fair and objective. However, the two companies did not make any statements after the SEC approved the plan.

Last June, the first Nasdaq plan worth $40 million was proposed before another plan was proposed last July worth $62 million.

Posted by James Fried on Wednesday March 27 2013, 3:51 AM EST. Ref: CNN. Link. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0