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Nasdaq in discussion with SEC over Facebook IPO mishandling

Exchange Group Nasdaq OMX is negotiating with the US Securities Exchange Commission (SEC) over a potential settlement related to poor handling of Facebook's offering.

Many market players and broker dealers claimed that they lost approximately $500m, due to technical faults at the exchange during the Facebook IPO launch on 18 May 2012, as reported by the Wall Street Journal (WSJ).

It is expected that the settlement will include a $5m monetary penalty for the exchange operator. Nasdaq had offered $62m to cover the losses, which was not accepted by UBS, Citigroup and other major financial firms.

The SEC officials are currently investigating Nasdaq Stock Market’s technology control measures and gathering information and related documents.

In September 2012, the regulator had alleged that the exchange operator had leaked market data to some customers, which was settled by the New York Stock Exchange’s parent company.

Around $5m was paid to resolve the SEC allegations, although NYSE Euronext neither admitted nor denied them.

It is also expected that the US market regulator will instruct the exchange to put substantial measures and system controls in place to prevent such glitches from occurring in future.