UBS Facing Battle On Facebook After Nasdaq Set Aside $62 Million
By Nina Mehta and Laura Marcinek
Nasdaq OMX Group Inc. (NDAQ)’s creation of a $62 million pool to pay brokers that lost money in Facebook Inc.’s public debut shows how far apart the exchange owner is from UBS AG (UBSN) on who is to blame for losses in the botched deal.
Switzerland’s biggest bank said yesterday that its second- quarter profit fell 58 percent in part because of losses that exceeded $350 million in the May 18 initial public offering. UBS is among brokers including Knight (KCG) Capital Group Inc. that have said they’ll seek compensation after a design flaw in Nasdaq’s computers delayed orders and confirmations just as the shares were about to start changing hands.
UBS promised legal action to get back more than five times as much money as Nasdaq has set aside. In proposing to revamp and enlarge the restitution fund on July 20, Nasdaq said it was seeking a reasonable way to compensate firms for which its “system difficulties caused objective, discernible harm,” according to a regulatory filing.
“I don’t see them getting anywhere close to covering this type of number,” Jillian Miller, an Atlanta-based exchange analyst at BMO Capital Markets, said in a phone interview. “Nasdaq was fairly clear on their conference call that they saw their proposal as a relatively final document. It’ll probably go forward as it is now, with Nasdaq keeping its proposal and UBS trying to sue them.”