[ by Melanie Gretchen ]

What happened on 5/18, Freaky Friday - the day when Facebook went public?

Facebook was on the verge of potential greatness the day it went public.  Since then, the outlook has not been so sunny.  Its share value has fallen to less than half its opening price, and corporations and investors alike have turned their collective anger onto Facebook, CEO Mark Zuckerberg, Nasdaq's OMX Group, and Nasdaq CEO Bob Greifeld.  Let's see how glitches preventing Nasdaq's IPO cross system from working properly, and delaying the dissemination of Cross transaction reports, have progressed:

11:05 a.m.

• Problems with the cross system begin, delaying the opening trade to 11:30 a.m.
• Nasdaq tries to execute the cross and print the opening trade.
• After the initial calculation, but before the trade is printed, the exchange's system accepts several new orders as well as cancellation and replace orders.
• The price is recalculated, and more order changes enter the system.

11:30 a.m.

• Nasdaq fixes the glitch
• The auction is completed, and the trade is printed.
• The stock opens at $42, based on volume of approximately 76 million shares, and continuous trading begins.
• Nasdaq assumes that all eligible orders had participated in the cross and that trade confirmations would be sent out immediately, when in fact, only orders received prior to 11:11 a.m. participated in the cross.

1:50 p.m. Orders received prior to 11:11 a.m. finally receive confirmation.

What's Happened Since: The Difference of 2 Hours

It's been 4 months since the infamous IPO and Facebook is still going.  Mark Zuckerberg is committed to his company [see our Who's News story, "Facebook Acts to Support Its Plunging Share Price"], and Facebook is still the reining social network.  Yet, much has changed, and not for the better:

How much Mark Zuckerberg has lost: $5 billion, from $19.4 billion to $14.7 billion between the 5/18 offering and the following Tuesday, 5/22.

How many lawsuits is Nasdaq facing: 9, led by First New York Securities, on the grounds that Nasdaq violated the SEC's Rule 10b-5 by making false and misleading statements as well as "omissions of fact" regarding the quality of its technology."  UBS, which lost $356 million because of the botched IPO, has also threatened to sue.

How much Nasdaq has offered to pay to compensate firms for their losses: $60 million. [See our Behind the News story, "Knight Qualifies Its Acceptance Of Nasdaq's $62Mn Facebook Compensation Plan".]

How much Nasdaq market-makers and other broker-dealers have lost: $500 million.

C-I Note: That's a lot of zeros.

For further details, go to [Traders Magazine, 8/31/12], [New Yorker, 5/31/12], and [AJC, 5/30/12].