Reuters’ sources reveal that NASDAQ’s glitch during Facebook Inc (NASDAQ:FB)’s IPO may have cost Citigroup’s financial arm as much as $20 million.
Citigroup Inc. (NYSE:C) may have had losses that run up to $20 million due to the glitches that Nasdaq had during Facebook’s debut to the stock market.
CNBC’s Kate Kelly also shares the same info on her Twitter Account:
#C has #FB market-making losses of at least $20m. That makes the current tab $91m and counting. Who’s next to report?
— Kate Kelly (@KateKellyCNBC) May 25, 2012
But these were not the only losses that were caused by the glitch. Citadel LLC, and Knight Capital Group are among brokers who have also reported losses, and this makes losses that were caused by the glitch to reach over $100 million.
Citadel Securities had a loss that amounted to around $35 million, while Knight Capital Group Inc (NYSE:KCG) reported a loss of $30 million.
Other large brokers that were involved in the IPO like UBS AG have not revealed their losses, and if they do, the total losses that may have been caused by the Nasdaq glitch at the IPO will increase exponentially.
The sources of Reuters say that Nasdaq OMX (NASDAQ:NDAQ) has asked all firms that were involved in the IPO to list all losses estimates. This is so that the Financial Industry Regulatory Authority can be able to check the filings, and after this a report will be created in around four weeks, for further action.
During Facebook’s much hyped IPO, there was a technical glitch that delayed trading for around 30 minutes, and during this time, orders for purchases and sales could not be verified. This led to great losses for traders and investors as the stock prices dropped, at times kissing the initial share price during Facebook’s first ever trading at the stock exchange.
However, it seems that this may just be the beginning of the woes that NASDAQ is facing. The exchange securities operator is facing threats of lawsuits and legal action from investors and brokers due to the glitches that occurred. This is since most of them have reported losses, as well as loss of confidence from clients.
In fact, observers are of the opinion that the 30 minute Nasdaq glitch was the reason, the pop gotten by Facebook Inc (NASDAQ:FB) shares when they were first listed, was barely audible since traders could not tell if their stock had been processed for sale or purchase.
Facebook Inc (NASDAQ:FB)’s pop at the IPO debut was at 13%, much lower than what other internet firms like Yelp Inc (NYSE:YELP), and LinkedIn Corporation (NYSE:LNKD) realized when they also got listed.
NASDAQ had set aside some $13 million to offset the losses that had been suffered by brokers and investors, but with the recent revelations, this figure may be increased. Nasdaq’s board is set to meet and make a decision on how much they are willing to pay for the losses that were suffered by US equity traders who took part in the IPO.
