[ by Melanie Gretchen ] IPOs have hit a rough patch following the botched handling of Facebook and the cancellation of the BATS IPO.  As Nasdaq prepares to offer a $40 million accommodation (apology) fund for firms who lost money in the mishandling, it is worth examining what's feeding industry fear – and what can be done to turn the tide. The Challenges of Going Public. The IPO market wasn't doing well before the BATS and Facebook debacles, according to Milton Ezrati, senior economist and market strategist at money manager Lord Abbett:

"There are a number of more fundamental reasons why I think the IPO market is languishing compared with what it might otherwise be, and this just adds to it."

One big challenge is the price tag, in the event of a blunder.  While Facebook was remarkable in its size and its attempt to accommodate a large number of investors, any company considering going public will look at what market makers lost in that IPO: -- over $100 million, up to as high as $200 million. Obstacle Course. Another element facing the IPO market is the stagnant economy.  Any company with its eye on going public is looking at relatively cheap equities compared to other investment, Mr. Ezrati said.  In addition, small companies are up against the Jumpstart Our Business Startups (JOBS) Act President Obama signed in April that was created the simplify their regulatory requirements but has effectively made the process more complicated.

"Between Dodd-Frank and Sarbox, and then with the uncertainties that are coming along with healthcare, put yourself in the shoes of a corporate manager thinking of expanding.  Right now he can’t even gauge what a new employee will cost him." -- Mr. Ezrati.

What Can Be Done. Andrew Terry, a partner at the law firm of Ropes and Gray, finds hope in the JOBS Act; he said the new law's provisions will encourage issuers who might not have filed to look into the possibility of going public. Mr. Frenkel said no legislation can spur the IPO market more than the U.S. economy. Status Update. Since the Facebook incident, the pace of IPO filings has not picked up, according to Mr. Terry, suggesting that technical problems are not the crucial issue. "Notwithstanding the short-term glitch, it says more about an uncertainty in the global market, what’s going on in Europe and domestic growth." -- Mr. Terry. For further details, go to [Traders Magazine, 6/19/12].