Nasdaq defends $62 million Facebook payout

Nasdaq defended its $62 million plan to compensate clients for losses from its botched IPO of Facebook.

Nasdaq defended its proposed $62 million compensation plan for firms hurt by its botched IPO of Facebook (FB).

In a letter sent to the Securities and Exchange Commission late Wednesday, Nasdaq (NDAQ) called the payout "fair and equitable."

The exchange operator told the SEC that, by law, it only owes trading firms, or so-called market makers, $500,000 based on SEC limits.  "The proposed accommodation pool goes well beyond what is required under current Nasdaq rules and specifically prioritizes the compensation of investors," Nasdaq's senior vice president, Joan Conley, wrote in the letter.

Related: Nasdaq can't shake Facebook troubles

Nasdaq originally offered $40 million in June, but a month later, it raised the payout to the current $62 million, which Nasdaq CEO Bob Greifeld called "definitive." At the time, customers publicly excoriated Greifeld and Nasdaq for under-compensating investors.

In late August, both Citigroup (C) and UBS (UBS) outlined objections to the plan, as did lawyers for both retail investors and proprietary trading firms.

But most eventually came around. Nasdaq said in its letter that the "vast majority of its 560 members have raised no objections to the plan.

Even Knight Capital Group (KCG) -- one of the most vocal opponents -- and Citadel changed their tune.

Knight, of course, ran into own trading glitches in early August. Some in the industry have called Knight's own nearly fatal technical glitches karmically-induced (Knight CEO Tom Joyce was Nasdaq's most vocal and persistent critic).

Related: Facebook is up 30%, but still risky

Nasdaq's stock regained all the ground it lost in the wake of Facebook's botched debut. Facebook, however, hasn't been as lucky. Despite a recent rally, Facebook's shares are still down 40% from its IPO price.

Posted in: citigroup, FaceBook, IPO, Knight Capital Group, Nasdaq, ubs

• Knight Capital 'likes' Nasdaq's Facebook plan

  Knight Capital, once one of the fiercest critics of Nasdaq's Facebook compensation plan, has done a 180-degree turn.

  "We support Nasdaq's efforts to reimburse its member firms for losses caused by Nasdaq's actions and decisions during the first day of trading in FB," Leonard Amoruso, Knight's general counsel, wrote in a letter to the SEC  late Wednesday.

  No one expected Facebook (FB) to debut at the opening bell on May 18, but MORE

  Catherine Tymkiw - Aug 30, 2012 2:44 PM ET
  Posted in: brokers, citadel, Citi, FaceBook, investors, IPO, Knight Capital, Nasdaq, stock, ubs

• Why bank stocks are immune to scandal

  Banks have had their share of bad publicity recently, but investors continue to give them the benefit of the doubt.

  Standard Chartered (SCBFF) is a prime example.

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  Ben Rooney - Aug 24, 2012 7:04 AM ET
  Posted in: bank, Bank of America, Barclays, JPMorgan, LIBOR, standard chartered, stocks, ubs, Wells Fargo

• Nasdaq can't shake Facebook troubles

  Nasdaq can't seem to put the Facebook IPO debacle behind it.

  Shortly after the botched IPO, Nasdaq proposed a $40 million settlement to compensate brokers who were affected by trading glitches on Facebook's opening day (May 18).

  Nasdaq (NDAQ) upped that figure to $62 million in mid-July, and Nasdaq CEO Bob Greifeld called it "definitive" during a July 25 conference call with analysts.

  Citigroup (C) and UBS (UBS) have come out swinging. In MORE

  Maureen Farrell - Aug 23, 2012 12:33 PM ET
  Posted in: citadel, citigroup, FaceBook, initial public offering, IPO, knight, Knight Capital Group, Nasdaq, SEC, ubs

• UBS lost $356 million on Facebook, suing Nasdaq for it

  UBS said Tuesday that it lost $356 million on Facebook's IPO due to Nasdaq's trading glitches during the company's market debut in May -- and it plans to sue the stock exchange for every cent of it.

  "UBS's loss resulted from NASDAQ's multiple failures to carry out its obligations, including both opening the Facebook (FB) stock for trading and not halting trading in the stock during the day," said UBS in MORE

  Hibah Yousuf - Jul 31, 2012 2:16 PM ET
  Posted in: citadel, citigroup, compesation, FaceBook, IPO, knight, lawsuit, losses, Nasdaq, ubs

• Wall Street's game of musical chairs

  Wall Street has been playing a game of musical chairs, and the tempo is picking up.

  From UBS to Deutsche Bank to JPMorgan Chase to Citigroup, executives are hopping to rival banks at a rapid clip. With low trading volume and tough market conditions, many chairs are also vanishing when the music stops.

  Among the lost chairs so far: Mitch Moore, the global head of UBS's (UBS) prime brokerage unit, resigned last MORE

  Maureen Farrell - Jun 18, 2012 1:50 PM ET
  Posted in: citigroup, Deutsche Bank, hedge funds, JPMorgan Chase, prime brokerage, ubs

• Credit Suisse needs 'dividend restraint'

  Credit Suisse and UBS need to raise additional capital and should cut back on their dividend payments to investors, the Swiss National Bank said Thursday.

  The two largest Swiss banks need to raise more capital and show "dividend restraint," said the SNB in its latest financial stability report, which noted that the banks have made progress toward meeting international capital requirements, but both need additional buffers to ensure resilience "given the MORE

  Ben Rooney - Jun 14, 2012 11:21 AM ET
  Posted in: banking, capital, credit suisse, swiss national bank, ubs