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UBS sues Nasdaq over $357 million IPO loss

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Re: UBS sues Nasdaq over $357 million IPO loss

#11

Post by brk »

endianswap wrote: post #7

Can someone shed some light onto how common of an occurrence this is? It seems like the world of finance is frequented by trigger-happy lawyers and that this might be a commonplace occurrence.

IANAL...

It's pretty common, I can recall lots of these cases around IPOs that didn't sky rocket as planned.

This one may be a little more unique because NASDAQ seems to have had actual technical issues with the IPOD. Given the current stock proceed of FB though, I'm curious how their argument is framed.

Re: UBS sues Nasdaq over $357 million IPO loss

#12

Post by kitsune_ »

smoyer wrote: post #10

Until a few weeks before the offering, FB was going to price at $28 per share. Why is anyone surprised that the $38 price had no support?

This isn't about the support level of Facebook's share price. UBS claims that NASDAQ was de facto dysfunctional. Too many buy orders were triggered, cancellations not being fulfilled and so on.

Re: UBS sues Nasdaq over $357 million IPO loss

#13

Post by kitsune_ »

kamaal wrote: post #9
nandemo wrote: post #8

Earlier quoted context omitted.

There were severe technical problems in Nasdaq's trading system during the IPO: http://abcnews.go.com/blogs/business/2012/06/nasdaq-outlines...

Aren't these sort of things covered in 'I have read and understood the Term and conditions' & then click on 'I agree'.

No, these are the things covered by the litigation specialists at corporate law firms.

Re: UBS sues Nasdaq over $357 million IPO loss

#15

Post by smoyer »

kitsune_ wrote: post #12
smoyer wrote: post #10

Until a few weeks before the offering, FB was going to price at $28 per share. Why is anyone surprised that the $38 price had no support?

This isn't about the support level of Facebook's share price. UBS claims that NASDAQ was de facto dysfunctional. Too many buy orders were triggered, cancellations not being fulfilled and so on.

True, but the implication was that a lot of their FB activity was executed by their traders on behalf of their (now unhappy) clients. It's my opinion that this lawsuit wouldn't be happening if FB's stock was at $50.

Re: UBS sues Nasdaq over $357 million IPO loss

#16

Post by rotskoff »

If you take a look at the UBS quarterly report, you can read the specifics of their claim (quoted below and available in full on the UBS website). Essentially, the bank asserts that NASDAQ initiated buy requests multiple times. Had Facebook stock sky-rocketed, as anticipated, I wonder if we would have ever heard a word of this?

"Due to multiple operational failures by NASDAQ, UBS’s pre-market orders were not confirmed for several hours after the stock had commenced trading. As a result of system protocols that we had designed to ensure our clients' orders were filled consistent with regulatory guidelines and our own standards, orders were entered multiple times before the necessary confirmations from NASDAQ were received and our systems were able to process them. NASDAQ ultimately filled all of these orders, exposing UBS to far more shares than our clients had ordered. UBS's loss resulted from NASDAQ's multiple failures to carry out its obligations, including both opening the Facebook stock for trading and not halting trading in the stock during the day. We will take appropriate legal action against NASDAQ to address its gross mishandling of the offering and its substantial failures to perform its duties."

Re: UBS sues Nasdaq over $357 million IPO loss

#18

Post by Camillo »

rotskoff wrote: post #16

If you take a look at the UBS quarterly report, you can read the specifics of their claim (quoted below and available in full on the UBS website). Essentially, the bank asserts that NASDAQ initiated buy requests multiple times. Had Facebook stock sky-rocketed, as anticipated, I wonder if we would have ever heard a word of this? "Due to multiple operational failures by NASDAQ, UBS’s pre-market orders were not confirme…

Shouldn't their "system protocol" have a way for the the server to recognize resends of orders it has already received, and ignore them?

Re: UBS sues Nasdaq over $357 million IPO loss

#19

Post by ZoFreX »

smoyer wrote: post #15
kitsune_ wrote: post #12

Earlier quoted context omitted.

This isn't about the support level of Facebook's share price. UBS claims that NASDAQ was de facto dysfunctional. Too many buy orders were triggered, cancellations not being fulfilled and so on.

True, but the implication was that a lot of their FB activity was executed by their traders on behalf of their (now unhappy) clients. It's my opinion that this lawsuit wouldn't be happening if FB's stock was at $50.

Well, of course not. That doesn't necessarily make it invalid. If your bank took 10k from your account and didn't give it back, you would sue them. If they put an extra 10k in your account you clearly wouldn't!

Re: UBS sues Nasdaq over $357 million IPO loss

#20

Post by andr »

rotskoff wrote: post #16

If you take a look at the UBS quarterly report, you can read the specifics of their claim (quoted below and available in full on the UBS website). Essentially, the bank asserts that NASDAQ initiated buy requests multiple times. Had Facebook stock sky-rocketed, as anticipated, I wonder if we would have ever heard a word of this? "Due to multiple operational failures by NASDAQ, UBS’s pre-market orders were not confirme…

The order workflow is generally like so:

1) Client sends order to market.

2) Market acknowledges it has received the order, sending back the market-generated order ID.

3) The market tries to fill the order (takes from 1ms to a day, depending on the type of order). When the order is filled, the client is informed.

4) At any time before the order is filled, the client can cancel it.

Perhaps during NASDAQ's issues the acknowledgements (step 2) were not sent and UBS didn't have the IDs of the orders they wanted to cancel.

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