Nasdaq Fined $10M Over Facebook IPO Failures 91
twoheadedboy writes "Nasdaq has been fined $10 million by the U.S. Securities and Exchange Commission over 'poor systems and decision-making' during the Facebook initial public offering. When Facebook went public on 18 May 2012, it was hoping for a major success, but technical glitches and poor decision making at Nasdaq caused real problems. The SEC said 'a design limitation' in the system to match IPO buy and sell orders was at the root of the disruption, thought to have cost investors $500 million. Orders failed to register properly, leaving banks like Citigroup and UBS in the lurch and making additional, unnecessary bids. They may still win money back from Nasdaq if legal challenges go their way."
Note the discrepancy (Score:5, Insightful)
The SEC said 'a design limitation' in the system to match IPO buy and sell orders was at the root of the disruption, thought to have cost investors $500 million.
Nasdaq has been fined $10 million by the U.S. Securities and Exchange Commission over 'poor systems and decision-making' during the Facebook initial public offering.
And people wonder why the average person hates the very idea of the stock market.
Why bother? (Score:2, Insightful)
A 10 million fine on the scale of these companies is NOTHING... the paperwork to pay it costs as much as the fine...
Once they get to this 'too big to fail' state... any fine under a billion dollars is nothing. You're just wasting everyones time.
Either correct the fine so that the company will notice and will change.. Or just ignore it.
This half assed way of doing things we use right now is pointless.
stop it.
Re:insiders got burned (Score:4, Insightful)
It depends what you mean by Joe q investor, but it is possible for a lot of people.
https://eresearch.fidelity.com/eresearch/ipo/ipocalendar.jhtml#eligibility [fidelity.com]
But really you don't want to mess with that sort of thing. Sound investing isn't about gambling with hot ipos. It's about using sound principles of portfolio management, diversification and risk management, and keeping management costs down.
http://online.wsj.com/article/SB10001424127887323475304578502973521526236.html [wsj.com]
Re:Note the discrepancy (Score:4, Insightful)
Now we just need to punish the people who valuated Facebook so high.
You mean like the hundreds of millions of users it has and who still value the service to the point where major established companies are bending over backwards to fit Facebook into their marketing schemes? Huh. Weird, I can't tell if that's more misanthropic or solipsistic of you.
Are you being serious? Considering Facebook's stock started at $38 and is now $23, and it took less than a week to lose 25% of its value, the only people being misanthropic or solipsistic are the ones who thought Facebook was worth such as ridiculous P/E ratio in the first place. Or the people who took advantage of the more weak minded traders who wanted another get rich quick scheme by buying an IPO they just expected to double in value over the first week.
Re:Note the discrepancy (Score:5, Insightful)
"Now we just need to punish the people who valuated Facebook so high."
I just don't understand this logic.
In retrospect, Facebook was priced "high" but still had lots of greedy people clamoring to buy it at that price.
Who should we punish?
- The greedy people who thought they would make a killing by flipping the stock?
or
- The greedy people at Facebook who priced the IPO to maximize revenue?
Nobody forced anyone to buy the stock. Nobody committed fraud by hiding material facts.
This is just a clusterfuck of greedy people. NASDAQ did screw up and made it harder for the greedy buyers to get in or get out and make profits. NASDAQ should pay for these screwups... and $10 million is peanuts.
I will enjoy watching all of these greedy people fight over money.
The taint of Goldman Sachs (Score:5, Insightful)
Once they got in and started floating that insane value for Facebook pre IPO, it should've been obvious to investors that the fix was in. If you see GS jumping in on anything, think of it as a neon "Warning: anal rape ahead" sign. Unless, you're privy to the innards of the deal of course...
Re:Want to Avoid this problem (Score:4, Insightful)
Because before going public FB was totally not about the money.
Re:Note the discrepancy (Score:5, Insightful)
> And people wonder why the average person hates the very idea of the stock market.
The average person does not hate it. Just your own little moral online tribal society hates it, where you reinforce to each other statements about the awfulness of this or that vis-a-vis politics, in support of a meme-based amalgam of people looking for power themselves.
Re:How do you value a "FaceBook"? (Score:5, Insightful)
Just remember: An 'analyst' is somebody who can make more money by selling advice on investing than he can by investing according to his own advice...
Re:Note the discrepancy (Score:4, Insightful)
Now we just need to punish the people who valuated Facebook so high.
Why? the market did that for you. The people who valued facebook that high at the end of the day are the ones who agreed to pay the $38 dollar IPO price. They now own shares worth ~$23.50. Isn't that punishment enough?
It was mostly big institutional investors too, probably could not happened to a more deserving bunch.