UBS has warned Nasdaq OMX that it could take legal action to recover the CHF349 million ($357 million) it lost thanks to the exchange operator's "gross mishandling" of the Facebook IPO.
Reporting its second quarter results, the Swiss bank confirmed the loss at its US Equities business in relation to Facebook's market debut, which has contributed to a 58% fall - from CHF1.02 billion to CHF425 million - in second quarter net income.
UBS says that its pre-market orders were not confirmed for several hours after Facebook began trading because of "multiple operational failures by Nasdaq".
Because the bank's system protocols were designed to make sure clients' orders were filled, consistent with regulatory guidelines, "orders were entered multiple times before the necessary confirmations from Nasdaq were received and our systems were able to process them".
This meant that when the exchange finally filled all the orders, UBS was left exposed to far more shares than its clients had wanted, saddling it with losses of hundreds of millions of dollars.
Says the bank: "UBS's loss resulted from Nasdaq's multiple failures to carry out its obligations, including both opening the Facebook stock for trading and not halting trading in the stock during the day. We will take appropriate legal action against Nasdaq to address its gross mishandling of the offering and its substantial failures to perform its duties."
Although UBS is the biggest known loser to have emerged from the Facebook fiasco, there are several other firms who have been left out of pocket, yet Nasdaq OMX has so far only put aside $62 million - recently upped from an initial $40 million - to cover voluntary payouts.