Reuters: Regulatory News: UPDATE 1-Nasdaq's Facebook move 'too limited'-Ex-SEC chief Pitt

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UPDATE 1-Nasdaq's Facebook move 'too limited'-Ex-SEC chief Pitt Jun 6th 2012, 21:00 Wed Jun 6, 2012 5:00pm EDT By Herbert Lash NEW YORK, June 6 (Reuters) - Nasdaq OMX's compensation for mishandling Facebook Inc's public offering is "too limited", though the exchange deserves praise for tackling the issue, former Securities and Exchange Commission chief Harvey Pitt said. The harm caused by Nasdaq's failures easily exceed the $40 million the exchange has set aside, Pitt said on Wednesday, responding to a query by e-mail. He also said there does not seem to be any rationale for how the number was arrived at or why it is fair. Nasdaq "deserves kudos for taking the bull by the horns, and not waiting for the SEC to finish its review," Pitt said. "But I think the steps it has taken - while positive - are too limited. The dollar estimates for harm caused by Nasdaq's failures easily exceed - several times over - the $40 million it has set aside." Pitt said Nasdaq would be better served by an independent internal review of all that occurred on May 18, when traders were left in the dark for hours as to whether their orders for Facebook shares had been executed. After the review, an independent group could decide how much Nasdaq should set aside and whether that should be all cash or should include discounts from future trading costs, Pitt said. Nasdaq's failure to live up to its self-regulatory responsibilities was "a blunder of major proportions," Pitt said. "The exchange's performance will likely be the subject of sharp criticism from the SEC," and "will hurt Nasdaq in its effort to corral additional listings and garner more U.S. IPOs." Nasdaq said on Wednesday it will offer cash and rebates totaling $40 million to compensate clients affected by the initial public offering, an amount well short of the losses claimed by top market makers. Link this Share this Digg this Email Reprints

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