The handing of the Facebook IPO has landed Nasdaq in some seriously hot water, in fact, they've made such a mess of things that they've had to write a cheque for $10 million just to the civil case relating to their handling of the Facebook IPO go away, making that $10 the largest ever penalty to be levied against a stock exchange! What did they do, run over Mark Zuckerberg's dog?
On a more serious note however, they did make a complete mess and break several trading rules on the day of the Facebook IPO. The U.S. Securities and Exchange Commission said that Nasdaq's "ill-fated decisions" led to a series of regulatory violations, so much so that even the senior executives of Nasdaq were aware of a few technical problems yet decided to press on and open up the Facebook stock for secondary trading, without addressing the initial problem, effectively setting themselves up for disaster.
It's said that the exchange's chief economist had spotted the discrepancies in the trading volume, while complaints for the market makers started to mount and even then the exchange management decided they would not halt trading.
This all sounds a little "so what" right? Well this little act of carelessness on multiple parties behalf resulted in over 30,000 Facebook orders being stuck in the Nasdaq system for over two hours where they should have either been executed or cancelled, this meant market makers lost something in the region of $500 million, a much more worrying figure than the $10 million fine.