Nasdaq Fined $10 million for Facebook IPO Failings
The SEC alleges that a fault in Nasdaq's technology caused a discrepancy in the cross, where the system lagged 19 minutes behind orders received by the exchange. As a result, over 38,000 marketable orders were dropped during the event, which is regarded as one of the largest IPOs on record.
While Nasdaq recognized the problem early, the SEC says, its repairs were inadequate, and it did not realize that the issue lay at the core of the matching system's design, rather than it just being a glitch. A knock-on effect from the system error also affected shares in Zynga.
"This action against Nasdaq tells the tale of how poorly designed systems and hasty decision-making not only disrupted one of the largest IPOs in history, but produced serious and pervasive violations of fundamental rules governing our markets," says George Canellos, co-director at the SEC's Division of Enforcement.
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