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Nasdaq settles US SEC charges for Facebook's IPO

Grant Gross | May 30, 2013
The U.S. Securities and Exchange Commission charged the Nasdaq stock exchange with violations of securities law for its "poor systems and decision-making" during Facebook's initial public offering, the agency has announced.

More than 38,000 Facebook orders placed between 11:11 a.m. and 11:30 a.m. Eastern time were not included in the cross, the SEC said. About 8,000 of those orders were entered into the market at 11:30 a.m. when continuous trading commenced, and the remaining 30,000 were stuck, the SEC said.

Just before the cross, Nasdaq officials noticed a discrepancy between the final indicative pricing and volume totals and the actual totals on NASDAQ's internal systems, the SEC said. This discrepancy indicated that there was still a problem with the cross and that some cross-eligible orders may not have been handled properly. But the stock exchange failed to address this issue during the minutes and hours following the cross, the SEC alleged.

The SEC's order found that Nasdaq violated parts of the Securities Exchange Act of 1934 by not complying with several of its own rules and failed to maintain sufficient net capital reserves on the day of Facebook's IPO.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

 

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