A furious Citigroup Inc. (NYSE:C) has slammed Nasdaq
for its inept handling of the Facebook Inc (NASDAQ:FB) IPO in May, accusing it
of causing losses to lots of investors and saying that the compensation offered
thereafter was too paltry.
The most awaited IPO of the year, that of Facebook,
got off to a shaky start with Nasdaq delaying the opening of trades while
orders got botched. The shares of the social networking site closed slightly
above $38, almost where they started.
Investigations are still on to investigate the cause
of the trading glitch but it has caused losses worth millions of dollars to
investors, especially large investors like Citigroup.
While Citi lost about $20 million in the IPO,
investment bank and brokerage UBS lost $356 million and trading firm and market
maker Knight Capital Group lost $35.4 million.
Get Complete
Analysis on FB Here
Incidentally Knight Capital itself became the victim
of a trading glitch in July when its trading software placed bizarre orders at
unnatural prices, causing the firm losses that wiped out its entire net worth.
Nasdaq had initially offered to compensate the losses
with an offer of $40 million but raised that to $62 million after its clients
protested.
The stock exchange has come in for a lot of criticism
in recent months for its inefficient trading systems and also for failing to
inform anyone about the problems it was encountering on the day of the IPO.
Citi vented its grievance against the exchange in a
17-page letter to the Securities and Exchange Commission on Wednesday. In fact
the letter has blamed the IPO incident on the self-serving interests of the
exchange.
“This is the first time we have chosen to comment
publicly,” Dan Keegan, Citigroup’s Global Head of Cash Equities told Deal Book
in an interview on Wednesday night. “We have tried to allow Nasdaq the time to
do what we believe to be right. Unfortunately, to date, we do not believe that
they have done so, hence the need to articulate Citi’s position.”
No comments:
Post a Comment