SEC approves Nasdaq's Facebook IPO compensation plan

SEC approves Nasdaq's Facebook IPO compensation plan

The Securities and Exchange Commission (SEC) has approved Nasdaq OMX's planned $62 million compensation package for firms affected by last year's botched Facebook IPO.

The 18 May IPO was beset by technical glitches - including a malfunction in the system's design for processing order cancellations - that left market makers unsure of whether trades went through.

Nasdaq OMX initially set aside $40 million to compensate firms' losses before upping the figure to $62 million in an SEC submission needed to change its rules to cover the offer.

Despite opposition from some market participants, including Citi and UBS, the watchdog has approved the rule change, setting the compensation package at $62 million.

"While the accommodation proposal is not designed to, and would not, compensate all claims of loss suffered by market participants relating to Nasdaq's system difficulties with the Cross, the Commission notes that the accommodation proposal would create a means of providing significantly more compensation for eligible claims, outside of litigation, than would otherwise be available," says the ruling.

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