[ by Howard Haykin ] "Illegal" ...  "Shameless" At Tuesday's industry conference, Nasdaq’s plan to compensate investors for the technically glitched debut of Facebook shares was called many things - most could not be comfortably printed on our site.  The event was sponsored investment bank Sandler O’Neill and held at the St. Regis Hotel in Manhattan Criticism of Plan to Pay Out Up-to-$40 Million. One panel discussion broke from its intended agenda in order to dedicate almost all its time to criticizing Plan that Nasdaq announced Wednesday afternoon.  Nasdaq's plan would pay its members as much as $40 million for losses incurred when Facebook’s first day of trading was plagued by technical problems.  Losses from the problems are estimated to range between $100 million and $200 million, and beyond.

Here's a sampling of comments:

• William O’Brien, CEO of Direct Edge, a stock exchange operator.  He offered the strongest criticism, saying "I think, illegal" when referring Nasdaq's intention to give member firms discounts on future trading costs.  He added called the proposal "shameless," and said Nasdaq’s plan "only compounds the investor confidence problem."
• NYSE Euronext, a Nasdaq competitor, said on Wednesday that the discounts were an unfair incentive that would hurt other exchanges.
• Jamie Selway, head of broker ITG, said of Nasdaq’s response: "It’s hard to envision it having been handled more badly," and added that the silence Nasdaq maintained after the error-plagued first day of trading was a mistake which hurt it with finance industry participants.
• Chris Concannon, executive of Virtu Financial, a trading firm, said the offering "was a complete debacle on all parts."  He also said, "The I.P.O. window is gone, literally gone because of this I.P.O.."

Presentation by Nasdaq CEO Robert Greifeld. Mr. Greifeld was scheduled to speak after that particular panel and he saved his comments on the Facebook problems for the end of his presentation.  He briefly touched on the criticism in a glancing fashion, but did say that Nasdaq’s offer was "more generous" than what other exchanges had done after experiencing similar problems.  Nasdaq has tried to stick to a "clinical analysis of what happened," given the "emotion and commentary in the air," he said. However, he acknowledged that “it’s obviously not a good situation.”  [Dealbook, 6/7/12]