First of all, let's get one thing straight: if instead of about to breach a
20-handle, the Facebook stock price was in the $60, nobody would care about
anything that happened in the past 3 days, everyone would be
happy and delighted, and increasing the velocity of money with the comfort that
some greater fool would be willing to pay even more for ridiculous overvalued
ponzi, pardon, portfolio holdings. Alas, we are not there, and as a result, the
fingerpointing phase has come and gone. Now come the lawsuits, because people,
led to believe in huge short-term profits, are now faced to face with a grim
sur-reality in which the tooth fairy was just exposed as the cookie monster. And
the latest farcical development: Nasdaq finally pulling market conditions,
but not just any market conditions - retroactive ones.
As the WSJ reports: "A senior Nasdaq Stock Market official told customers Tuesday afternoon that it would have pulled the plug on Facebook Inc.'s initial public offering had it known the full extent of the technical problems that plagued its systems. On a conference call with brokers after Tuesday's close, Eric Noll, head of transaction services, said the exchange "by no means would have gone forward" with the much-watched Facebook debut if it had known problems would disrupt a "normal trading day." "In retrospect, it was incorrect," Mr. Noll said of Nasdaq's interpretation of problems." At this point every plaintif's bar attorney eyes just lit up, because what Nasdaq just admitted was liability. And every single retail investor who has lost money, which would be everyone who has bought and held as the stock closed at a fresh all time (read 2.7 day) low, will now demand that had they known what the Nasdaq pretended not to know, but now knows, they would not have put that limit $43 buy order. In the meantime, the actual stock price of Facebook will flounder as the stock becomes a whipping boy if not for investors, then for attorneys everywhere.
More from the WSJ:
As the WSJ reports: "A senior Nasdaq Stock Market official told customers Tuesday afternoon that it would have pulled the plug on Facebook Inc.'s initial public offering had it known the full extent of the technical problems that plagued its systems. On a conference call with brokers after Tuesday's close, Eric Noll, head of transaction services, said the exchange "by no means would have gone forward" with the much-watched Facebook debut if it had known problems would disrupt a "normal trading day." "In retrospect, it was incorrect," Mr. Noll said of Nasdaq's interpretation of problems." At this point every plaintif's bar attorney eyes just lit up, because what Nasdaq just admitted was liability. And every single retail investor who has lost money, which would be everyone who has bought and held as the stock closed at a fresh all time (read 2.7 day) low, will now demand that had they known what the Nasdaq pretended not to know, but now knows, they would not have put that limit $43 buy order. In the meantime, the actual stock price of Facebook will flounder as the stock becomes a whipping boy if not for investors, then for attorneys everywhere.
More from the WSJ:
We'll give the Nasdaq one thing though: unlike everyone else in this day and age, whose primary recourse is to scapegoat, and to deflect blame, Nasdaq refused to bash that one whipping boy for all things market structure (which Zero Hedge first warned about over 3 years ago): high frequency trading.Nasdaq said it can't promise customers they will be compensated for losses due to its IPO system failures.
We don't ultimately know whether everyone will get a dollar on the dollar," Mr. Noll said, saying the ultimate payouts will depend on regulatory approval and sign-off from Nasdaq's own board.
The exchange operator has been in touch with Facebook since the IPO blunder last week, according to Mr. Noll, and those conversations were "ongoing," he told brokers on the conference call.
When asked why Nasdaq hadn't tested for the high levels of order cancellations that it said drove the technical problems with Facebook's IPO opening, Mr. Noll said on the conference call that exchange officials believed they had sought to address such potential issues.
High-frequency trading firms, known for the heavy burden they place on exchange systems, played no role in Nasdaq's problems opening up Facebook's shares for trading Friday morning, Mr. Noll said on the conference call. Most such firms do their trading after stocks open on the broader U.S. markets, Mr. Noll told member firms, and there were no signs that any were active as Nasdaq struggled to match up buy and sell orders to form the opening trade in Facebook.
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