Nasdaq’s post-Facebook plan is panned

Nasdaq has promised to pay out about $40 million in cash and discounts to firms that saw losses after Facebook’s initial public offering.

But according to media reports, that’s not enough for some firms such as Knight Capital Group, which the Wall Street Journal reported estimates that its losses in Facebook’s debut total as much as $35 million.

At an investor conference, NasdaqOMX Chief Executive Robert Greifeld faced questions from Knight and others who said that compensating firms was not the best way to deal with the problem. Direct Edge Holdings LLC Chief Executive William O'Brien, the Journal reported, said that offering discounts on trading was a “shameless attempt to turn a big investor confidence-eroding event into a competitive advantage.”

On Wednesday, NYSE Euronext issued a statement saying it thinks such a plan would be “wholly inconsistent with fair practice and an undue burden on competition” and would be “tantamount to forcing the industry to subsidize NASDAQ’s missteps and would establish a harmful precedent that could have far-reaching implications for the markets, investors and the public interest.”

Meanwhile, Facebook was trading up Friday afternoon after a report from the analytics firm ComScore said that Facebook ads do have an impact on consumer behavior. Contrary to recent surveys, the company said, “Facebook earned media is having a statistically significant positive lift on people’s purchasing of a brand.”

Facebook is also working on its solution to strengthen its mobile presence, having launched both an app store and two-step mobile payment system this week. Facebook had previously said that it wasn’t sure to make money on the mobile platform, an admission that had hurt the social network, particularly as more users access it over their smartphones.

As of 2:30 p.m., the stock was trading at $27.02 — up about 2.9 percent from Friday’s opening price, but sill 29 percent down from its market debut of $38.

(Washington Post Co. Chairman and Chief Executive Donald E. Graham is a member of Facebook’s board of directors .)

Related stories:

Nasdaq proposes $40 million payout to firms hit in Facebook IPO

Facebook stock performance, IPO said to be under investigation by SEC

Facebook mulls lowering age restrictions

Hayley Tsukayama covers consumer technology for The Washington Post.

business

technology

Success! Check your inbox for details. You might also like:

Please enter a valid email address

See all newsletters

Comments
Show Comments
Most Read Business

business

technology

Success! Check your inbox for details.

See all newsletters

To keep reading, please enter your email address.

You’ll also receive from The Washington Post:
  • A free 6-week digital subscription
  • Our daily newsletter in your inbox

Please enter a valid email address

I have read and agree to the Terms of Service and Privacy Policy.

Please indicate agreement.

Thank you.

Check your inbox. We’ve sent an email explaining how to set up an account and activate your free digital subscription.