(NEW YORK) — The Nasdaq stock exchange announced a $40 million fund Wednesday to compensate investors who were “disadvantaged” by technical problems during Facebook’s rocky IPO on May 18.
The Nasdaq OMX Group board said an accommodation program will pay qualifying member firms with cash or in trading discounts in a step to re-build its reputation after a technical glitch confused investors about their trading orders.
The IPO orders that qualify for the program are those that were “directly disadvantaged due to a clear error on the part of Nasdaq” and the member had specific “uncertainty” regarding their order. No orders entered after 11:30 a.m. will be considered as part of the review process.
“I would also like to make clear that this is a member firm accommodation policy because we have only the relationship with our member firms, not with brokers or investors or people who are customers of our member firms,” said Eric Noll, a Nasdaq executive, in a video outlining the plan. “We are only in a position really to discuss accommodations to those member firms, not beyond that.”
A spokesman for Nasdaq declined to comment on how this fund will affect retail investors who are customers of the member firms.
Nasdaq said three types of transactions would qualify for the program: sell orders at or below $42 that did not execute, sell orders at $42 or less that executed at an inferior price and buy orders at $42 that were executed but not immediately confirmed.
Facebook’s IPO has been one of the worst-performing in decades. The shares are down 33 percent from their first-day closing price to a low of $26.
Copyright 2012 ABC News Radio
Dylan Byers, CNN Newswire
Brian Stelter, CNN Newswire