UBS Lost Million Dollars Due to Facebook IPO Glitches
Reports emerging from CNBC have stated that the Swiss bank UBS may have lost 350 million dollars during the Facebook IPO. The report claims that UBS tried to place orders several times but did not receive any confirmation of the purchase. Once the order from the bank did go through, UBS ended up getting more shares than they actually wanted to purchase.
Many analysts had expected losses after the botched Facebook IPO last month but the current number being reported for UBS is almost ten times what was expected. The Swiss bank did make a statement that made public the fact that UBS had lost money on the IPO but it did not give any specifics. The report from CNBC also indicates that UBS is looking at taking the NASDAQ stock exchange to court because of its mishandling of the IPO.
The losses that the bank has incurred were from the falling price of the Facebook stock and the purchase of more stocks than they had ordered. Reports show that UBS had only wanted to purchase one million shares during the IPO. They ended up resubmitting their order several times because the initial orders did not get any confirmation. When the orders did finally go through, the system ended up finalizing all the orders the bank had resubmitted. This left the bank with a lot more shares than it had planned to buy. If the share price had increased like many had hoped, UBS might have made a tidy sum from all the extra shares. However, this was not the case and the Facebook share slid rapidly from its initial price of 38 USD after hitting a high of 45 on the first day. The losses the bank faced were multiplied by all the unwanted stock it was holding.
Nasdaq and Facebook are already facing legal action from several other parties because of the IPO. Nasdaq’s systems were troubled by glitches on the day of the stock offering and many buyers faced unfulfilled orders, delayed responses from the system and confusion. Nasdaq has tried to avert legal actions by stating last week that the stock exchange was establishing a $40m fund to compensate firms that lost money. Many traders and firms believe that the amount is not enough to cover loses.
