When it comes to IPOs, Nasdaq has decades of experience. But its handling of the Facebook (NASDAQ:FB) offering made the exchange look like a amateur. Its computers went haywire, and investors lost about $500 million.
Inevitably, a rash of lawsuits followed. But according to a report in The Wall Street Journal, it looks like Nasdaq is working on settling all the liabilities.
Yet don’t expect much. The Securities & Exchange Commission may extract a fine of a paltry $5 million. Then, about $62 million could go to investors. While this appears unfair, it looks like Nasdaq is in a strong position. Keep in mind that its own rules put severe limits on liabilities.
Then again, Nasdaq realizes that it probably needs to show some leniency as well. To remain a viable exchange, it must to maintain strong relationships with institutions — and this means providing compensation that goes beyond the legal minimum.
More important, Nasdaq also needs to make sure it never repeats the Facebook debacle. So, let’s hope the exchange has taken steps to improve its computer systems as well as internal controls.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.