Company loses millions in NASDAQ glitch
(CBS News) At the end of the first week of trading, Facebook has made very few new friends. Investors who got in on the initial stock offering saw the stock fall from its debut price of $38 to just under $32 on Friday. The only thing that rose was anger over the handling of the debut offering by the NASDAQ stock exchange.
For one company, the technical glitches that marred Facebook's market debut resulted in a huge loss.
"Knight Capital Group lost $30 million," said Tom Joyce, the company's CEO.
Joyce said the NASDAQ, knowing it had problems, never should have opened trading on the stock. "It was a trading debacle," he said.
For nearly two-and-a-half hours -- from when Facebook began trading about 11:30, to shortly before 2 p.m. -- traders everywhere could not get electronic confirmation that they'd bought or sold the stock.
Asked if NASDAQ was telling him nothing, Joyce replied, "Nothing."
Knight Capital, which facilitates trades for big and small investors, believed it had sold millions of Facebook shares at about $42.
"When the information came back from NASDAQ, they told us in point of fact we had bought at the issue price," said Joyce.
By then, Facebook's stock price was falling, and Knight's traders scrambled to dump its shares. That's how they racked up more than $30 million in losses.
"I've heard rumors in the industry that the loss is in the neighborhood of $100 to $200 million," Joyce said.
Citadel Securities lost up to $35 million, and UBS and Citigroup between them reportedly lost another $50 million.
When asked about his clients' reaction, Joyce said, "Well, as you might imagine, the reaction was somewhere between frustrated and angry."
He said his company has never had a loss like this: "It was, I would say, the worst performance by an exchange regarding an IPO that I've ever seen."
Knight Capital is considering legal action. NASDAQ officials said this week they can't promise customers they'll be fully compensated for losses due to its system failures.
- Okla. tornado survivor finds dog buried alive under rubble
- 5/24: I-5 bridge collapses north of Seattle; "On the Road": Three siblings survive Okla. tornado
- The forecaster who sounded the alarm for Moore, Okla.
- Sibling rivalry takes a backseat after Okla. tornado
- Jersey Shore shop owners reopen for Memorial Day
- Survivor of KKK Baptist Church bombing: "I had to forgive"
- I-5 bridge collapses north of Seattle
- On the road: Three siblings survive Okla. tornado
- Survivor of Bangladesh factory collapse speaks out
- CBS News goes undercover in a Bangladesh clothing factory
- Security dwindled before deadly Libyan consulate attack
- Man killed in brutal London attack
- Tornado victim reunites with dog during interview
- Teacher injured in Okla. tornado takes first steps
- Second London terror suspect identified
- Injured third-grade teacher tells of trying to protect students