[ by Howard Haykin ] Nasdaq CEO Bob Greifeld reportedly made that comment upon receiving Citigroup's 17-page tirade against Nasdaq-OMX, the largest electronic screen-based equity securities market in the U.S - according to an unnamed Wall Street source who is closely involved in the matter.   The bank, of course, was expressing its outrage at Nasdaq's $62 million offer as compensation to market makers who are said to have collectively lost at least $500 million, due to the effects of Nasdaq's supposed mishandling of Facebook's IPO on 5/18/12 .

Note: The comment in thes title includes reference to the traditional English translation of the French phrase, "Qu'ils mangent de la brioche," supposedly spoken by "a great princess" upon learning that the peasants had no bread.  The quote often is mistakenly attributed to Marie Antoinette.

Citigroup, along with other Wall Street firms go so far as to say the exchange was grossly negligent in its handling of the oft-delayed equity offering, and that it became woefully to many that the IPO should have been aborted that day and rescheduled for the following week.

"Nasdaq was grossly negligent in its handling of the Facebook I.P.O., and as such, Citi should be entitled to recover all of its losses attributable to Nasdaq's gross negligence, not just a very small fraction as is currently the case." -- Citigroup, in its letter.

When Nasdaq encountered troubles, it delayed the opening of trading.  That delay and subsequent delays led to thousands of unannounced and/or botched customer orders.  Without advice or updates from Nasdaq, some firms reentered their customer orders - on the presumption that the original orders never got to Nasdaq - because they typically would have received confirmations from the exchange to say the orders were filled - that, however, never happened.  By the close of the trading session Facebook shares closed at just above $38, roughly where they started - though they hit an intra-day high of around $42.  Since then, Facbook shares have continued to fall and, to date, they've lost nearly 50% of their market value. Citigroup has lost about $20 million related to the IPO, according to 2 people with knowledge of the matter.  UBS reported a $356 million loss. And Knight Capital, which has suffered its own missteps in recent weeks, lost $35.4 million. Nasdaq Offers $40 Million, Then $62 Million. To compensate firms for their losses, Nasdaq initially offered $40 million - in a package that included cash and exchange credits.  In response to members' protests, Nasdaq followed up with a cash offer of $62 million. Citadel calls the Nasdaq offer "objective and fair," and on Tuesday, recommended in writing that the SEC should approve Nasdaq's proposal.  It's not understood how Citadel could differ so sharply from Citigroup, which outlined a lengthy list of grievances against Nasdaq, that included the following claims:

• Nasdaq had not tested its systems thoroughly.
• Nasdaq failed to properly disclose the problems on the morning of the IPO.
• "Market participants' losses were not caused by a system glitch," but rather by "grossly negligent, self-serving business decisions."
• Nasdaq's "regulatory focus has been narrowed" and its current for-profit status creates natural conflicts of interest - 2 of Nasdaq's self-defense arguments.

Citigroup's Global Head of Cash Equities, Dan Keegan, said in on Wednesdy: "This is the first time we have chosen to comment publicly.  We have tried to allow Nasdaq the time to do what we believe to be right.  Unfortunately, to date, we do not believe that they have done so, hence the need to articulate Citi's position." "As set forth in detail below, the hundreds of millions of dollars of losses suffered by market participants in connection with the Facebook IPO resulted from a series of hasty, self-interested and high-risk business decisions by Nasdaq, which did not take full account of the negative downstream effects of those decisions." Nasdaq stands by its stated position and adamantly disagrees with Citigroup's lateest contentions, according to 2 people with knowledge of the matter, who added that Nasdaq's customers are required to sign a contract agreeing to the exchange's rules, before they begin trading on the exchange.   Nasdaq declined further comment. To access the referenced story, go to:  [Dealbook, 8/22/12].