Weekend Economists Go Out with a Boom August 24-26, 2012

[Demeter]

37. UBS says Nasdaq's Facebook compensation plan inadequate

WHAT DO THEY WANT? EGG IN THEIR BEER?

http://in.reuters.com/article/2012/08/23/us-nasdaq-facebook-compensation-idINBRE87L0W620120823

The $62 million compensation plan proposed by Nasdaq OMX Group for fallout from Facebook's botched IPO is "inadequate to address the magnitude of Nasdaq's unprecedented failures", UBS Securities LLC said in a letter to U.S. regulators.

UBS Securities, an arm of Swiss bank UBS AG, said it lost over $350 million when Nasdaq technical malfunctions led to a delay in order confirmations during the $16 billion May 18 IPO, causing UBS's systems to re-enter orders multiple times and leaving it with a huge position of unwanted stock.

Major market makers and broker dealers, including UBS, lost upward of $500 million in the IPO.

UBS also said the types of claims for trading losses that Nasdaq agrees to compensate "should be expanded to include the full extent of losses caused by Nasdaq, and that the requirement that participants in the program release other legitimate claims they may have against Nasdaq is fundamentally unfair".

"Simply put, Nasdaq's proposal to pay $62 million in the aggregate for all Facebook-related claims is woefully inadequate," UBS said in the letter to the U.S. Securities and Exchange Commission (SEC) dated August 22. The UBS letter was one of nine posted by market makers, brokers, a trade group, and lawyers, on the SEC's website on Thursday by around midday. Eight of the letters were critical of the proposal, calling for changes or the outright rejection of the plan. One urged for its passage...