Facebook investors have been offered $40 million (€31.8 million) by the Nasdaq stock exchange for a computer glitch that stopped them trading during the social networking site's initial public offering.
Nasdaq OMX Group Inc said it will offer $40 million in cash and rebates to clients harmed by its mishandling of Facebook's market debut.
The opening of trading on May 18th got off to a shaky start as the Nasdaq was delayed following a hitch in delivering trade execution messages related to its IPO.
Nasdaq yesterday said $13.7 million (€10.9 million) would be paid 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.
"We have been embarrassed and certainly we apologised to the industry, but the important thing we have to do is focus on the future," Nasdaq chief executive Robert Greifeld said.
Facebook began trading on the Nasdaq stock exchange on May 18th, in the third-biggest IPO in history.
The social media company sold 180 million shares in its IPO. In addition, 241.2 million were sold by existing shareholders. With the IPO pricing the shares at $38 per share, this generated $6.8 billion for Facebook and $9.2 billion for existing shareholders.
It was the first US company to IPO at over $100 billion, and is the third largest IPO in history, behind Visa and General Motors.
However, the proposed compensation, subject to approval by regulators, drew sharp criticism from rival exchanges for its use of rebates and from clients claiming losses far in excess of what Nasdaq is offering.
"This is tantamount to forcing the industry to subsidize Nasdaq's missteps and would establish a harmful precedent that could have far reaching implications for the markets, investors and the public interest," NYSE Euronext, Nasdaq's main competitor, said in a statement.
"We intend to strongly press our views that Nasdaq's proposal cannot be allowed to permit an unjust and anti-competitive situation."
Additional reporting: Reuters
