The US bank is one of several institutions that lost millions of dollars on Facebook?s first day of trading, when orders it took from customers were not properly processed.
In a 17-page letter to the Securities and Exchange Commission (SEC), Citi accuses Nasdaq of gambling that its own software would work even as signs emerged on the morning of the May 18 float that it was struggling to cope with the volume of orders.
?Nasdaq?s failure to notify market makers like Citi of what was going on behind the scenes is inexcusable,? Citi said.
The criticism is the toughest yet of Nasdaq?s role in the much-hyped $104bn (?65bn) offering that saw Facebook float at $38 and steadily fall 49pc since. Citi, which is said to have lost about $20m in the IPO, said that Nasdaq?s proposed compensation of $62m for all market makers affected covered ?only a small fraction of its total losses?. The bank also rejected claims there were limits on Nasdaq?s liability because of its legal status as a ?self-regulatory? exchange.
UBS, Knight Capital and Citadel, a hedge fund, are among the other companies which lost money in their capacity as market makers in Facebook?s shares. UBS, which lost more than $350m, is examining its legal options. Citadel wants the SEC to approve Nasdaq?s compensation plan after the exchange lifted the payout from $40m to $62m. Nasdaq declined to comment.
There was better news for Facebook yesterday, when US regulators approved its $1bn acquisition of Instagram, the Californian start-up behind the photo-sharing app. Given that Instagram does not have any revenues, the Federal Trade Commission said it was unlikely the deal would give Facebook too much clout in online advertising.
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