Did Facebook’s IPO get tainted with buying and selling that shouldn’t have happened? It sounds like a number of things went wrong in Wallstreet as stock traders, hedge fund managers and people betting on FB stock possibly got burned.
A hedge fund manager was so upset with the situation he revealed to Business Insider some of the issues he’s been running into. It was asked that the manager’s name be kept anonymous because he said, “I have a mortgage” and “I’m a blue collar Wall Street guy…I could lose my job if my partners found out I was talking to you.”
The first problem it seems that NASDAQ had was on opening day of the Facebook IPO. The system was somehow broken in that it was not delivering confirmed trades on buy and sells of the FB stock. While the weekend left traders scratching their heads wondering if their stock had actually sold or been purchased they got a surprise Monday morning.
In order to clear up the confusion NASDAQ started calling stock brokers about the Facebook stock issues. From the interview with the anonymous hedge fund manager with Business Insider it was said, “NASDAQ has a rule that says this is how we handle computer f–kups. NASDAQ rule 4626. It says if we f–kup we’ll pay it. They have a kitty of $3 million that they’ll payout.”
How was one supposed to get a piece of this $3 million backup fund in case NASDAQ had a computer problem? A form. The form caused the confusion that has apparently created lots of selling on Monday of Facebook stock. There was a 12:00pm lunch time deadline for the form to be filled out and submitted to NASDAQ in order to get money from their computer error fund.
The form applies to the NASDAQ rule 4626 and was pretty short and sweet. The form simply asked a trader how much they tried to sell NASDAQ:FB at and what they actually sold NASDAQ:FB at. Both parts of the form had to be filled out so traders took the que that in order to submit the form they need to sell the Facebook stock they were holding.
This apparently caused a rash of selling of Facebook stock and created downward pressure on the price which in turn caused more selling. NASDAQ isn’t answering press attempts to comment on the way the whole Facebook stock mess went down. It will probably be a few days before everyone knows whether NASDAQ will try and fix this or if stock traders get burned with major losses.