Nasdaq settles SEC charges for Facebook’s IPO - ramirezwharleas

The U.S. Securities and Exchange Commission charged the Nasdaq stock convert with violations of securities law for its "poor systems and determination-making" during Facebook's initial offering, the agency has proclaimed.

National Association of Securities Dealers Automated Quotations has agreed to pay $10 million, the largest SEC liquidation with a stock market, to settle the agency's charges, the Second aforementioned in a pressure release.

A design flaw in Nasdaq's trading system disrupted Facebook's Initial offering in May 2012, disdain anticipation that the social network's IPO would beryllium the largest in history, the SEC same. When that happened, Nasdaq officials "made a series of ill-fated decisions," the government agency same in a statement.

"Exchanges have an responsibility to insure that their systems, processes, and contingence planning are stout and adequate to manage an Initial public offering without disruption to the grocery store," the SEC said.

What happened

During an parking brake league Call, members of National Association of Securities Dealers Automated Quotations's senior leaders team definite not to delay the start of secondary market trading in Facebook with the outlook that they had fixed system problems aside removing a couple of lines of computer code, the SEC said. The decision to locomote forward led to the violation of several Nasdaq rules, the agency said.

The system problem caused much 30,000 Facebook orders to be suspended in National Association of Securities Dealers Automated Quotations's organization for to a greater extent than ii hours, the SEC said.

"This action against Nasdaq tells the tale of how poorly intentional systems and hasty decision-making not only noncontinuous one of the largest IPOs in history, but produced serious and pervasive violations of fundamental rules governing our markets," George Canellos, co-director of the SEC's Division of Enforcement, aforementioned in a command.

Steps taken aside Nasdaq

Nasdaq has taken several steps to address the issue, Robert Greifeld, CEO of the NASDAQ OMX Group, said in a statement. The company has created new CIO and global head of market systems positions, and it has deployed new processes for changing its technology, he wrote.

NASDAQ has also established a dedicated engineering squad to monitor daily system performance, he added.

Before Facebook's IPO, NASDAQ "had conducted to a greater extent than a one hundred IPOs using the same or similarly intentional systems, without incident," Greifeld said. "While we prepared extensively for the Facebook initial public offering, including thorough tests of our systems with member firms, the challenges we encountered that day were unprecedented."

Despite the Facebook incident, Nasdaq has "compiled a consistent record, maintaining open, reliable markets with 99.999 percent uptime," he added.

Facebook Initial offering problems

The coordinated of buy and sell orders in an IPO is referred to as "the traverse." The systems problems encountered during the Facebook IPO on May 18, 2012, caused the cross to descent 19 minutes prat the orders conventional by Nasdaq, according to the SEC's order.
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 marketplace at 11:30 a.m. when continuous trading commenced, and the remaining 30,000 were cragfast, the SEC same.
Just earlier the cross, NASDAQ officials detected a variant between the final indicative pricing and book totals and the actual totals along NASDAQ's internal systems, the SEC said. This discrepancy indicated that in that respect was still a problem with the cross and that some cross-eligible orders whitethorn not throw been handled properly. But the strain exchange failed to direct 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 Commutation Act of 1934 by not complying with several of its own rules and failed to maintain decent net capital reserves on the day of Facebook's IPO.

Source: https://www.pcworld.com/article/452119/nasdaq-settles-us-sec-charges-for-facebooks-ipo.html

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