Weeks after it's disastrous debut, Facebook is getting in on the blame game for their first day's poor performance, and they're pointing their fingers at NASDAQ.
Dealbook's Evelyn Rusli reports Facebook is putting the blame for their IPO flop on NASDAQ in a motion to consolidate all the shareholder lawsuits filed after the company's messy IPO debut the company is planning to file, possibly on Friday. Rusli says the motion will be, "relatively thin on detail, it will provide some perspective on Nasdaq’s role on listing day and the effect its actions had on the stock’s trading activity," and that Facebook will, "place some blame on Nasdaq," according to her source. According to Rusli, the motion will signal the first time Facebook has publicly addressed their IPO performance.
Meanwhile, the Wall Street Journal explains that NASDAQ is nearly impossible to beat in court. The exchange's "dual role as a regulatory body as well as a business that makes money running markets" puts it in a legal grey area that makes it difficult to hold accountable for trading errors. They contend the contracts companies sign to register protects them. "When you look at member agreements that people sign, it's quite explicit that they're bound by that accommodation policy," Robert Greifeld, Nasdaq's chief executive, said last week. Lawsuits filed against NASDAQ from bankers who think they lost millions of dollars on IPO day allege that NASDAQ was "negligent" for not anticipating and making preparations to handle the increased demand. NASDAQ announced last week they agreed to pay $40 million to financial firms for their role in the mistakes.
The blame for Facebook's IPO blunders has fallen on a few different shoulders since May 18. NASDAQ faced much of the blame for Facebook's problems, first for their computers failing at the start of the trading day because of the high demand. Facebook and Morgan Stanley have both been criticized for over-valuing the stock, too.
This article is from the archive of our partner The Wire.
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