[ by Howard Haykin ] Wednesday was the deadline for interested parties to comment on Nasdaq's $62 million plan for compensating its market-makers for losses incurred during the bungled Facebook IPO.  First, Citigroup weighed in by submitting to the SEC a 17-page critical bashing of Nasdaq for selfishly trying to stick its member firms with hundreds of millions in losses that were directly attributed to the exchange's mishandling of the IPO that day - that featured errors in calculations, errors in judgment, technology glitches and a general state of unpreparedness. UBS followed with its own account and accounting of the Facebook IPO, that the firm submitted by letter to the SEC.  UBS AG, the latest financial firm to shoot down Nasdaq's $62 million proposal to compensate customers who lost money, estimates its own losses at $356 million.  UBS called on the Commission to reject the exchange's proposal, describing it as "inadequate to address the magnitude of  Nasdaq's unprecedented failures." UBS Takes Nasdaq to Task. Like Citigroup, UBS provided a harsh take on Nasdaq's  failing to execute trades during the IPO, and its culpability for the pattern of errors and delays that plagued the Facebook offering caused "tremendous, unanticipated stress on UBS's retail marketing system."

"UBS ended up with a substantial unintended long position in Facebook shares, the liquidation of which - due to the rapid decline in the price of  Facebook stock both on the day of the IPO and in the days and weeks after - resulted in losses in excess of $350 million." UBS added, "Simply put, Nasdaq's proposal to pay $62 million in the aggregate for all Facebook-related claims is woefully inadequate."

UBS also that Nasdaq's proposed compensation plan would limit the ability to pursue "other legitimate claims" against the exchange - which is patently unfair to firms who believe that the proposal is insufficient:  "If  the rule is adopted as proposed, we suspect that a number of  firms may be left with no choice but to decline to participate in the program in order to preserve their rights." "This would lead to a perverse outcome, with the firms that suffered the smallest harm participating in the program and those that suffered the greatest harm excluded from the program." [Dealbook, 8/23/12]