UBS AG (UBS, UBSN.VX)) decried a proposal from Nasdaq OMX Group Inc. (NDAQ) to make up losses for firms damaged in the Facebook Inc. (FB) stock-market debut, calling the plan "woefully inadequate."
The Swiss banking group, which pegged its own losses in the episode at $356 million, in a letter urged regulators weighing the Nasdaq OMX plan to reconsider the exchange company's cap on damages payable due to problems with its technology.
UBS joined a growing chorus of Wall Street firms calling on the Securities and Exchange Commission to push Nasdaq OMX to boost compensation for traders and brokers that took losses trading in the Facebook flotation May 18.
A torrent of cancellations and changes to standing orders that morning overwhelmed Nasdaq OMX's usual process of matching up orders to form the initial trade in Facebook's shares, and steps taken to open the stock resulted in millions of dollars' worth of trades lingering unconfirmed for hours.
Without confirmations from Nasdaq OMX on the trades, firms were forced to guess at their positions in the newly minted stock, and in some cases found themselves far off the mark when confirmations were received.
Nasdaq OMX last month proposed a $62 million, all-cash compensation package that would be split up among afflicted firms. Estimates of Wall Street's total losses in the session have been put at some $500 million.
"We strongly urge the Commission to reconsider the level of the proposed cap in light of the actual damages caused by Nasdaq in its mismanagement of the Facebook IPO," UBS officials wrote in a letter to the SEC dated Wednesday.
UBS also told regulators that Nasdaq OMX's method of calculating which trades would be covered by its payback proposal was too narrow, and objected to the idea that firms may have to waive legal claims against the exchange group should they seek coverage under Nasdaq's plan.
A spokesman for Nasdaq OMX declined comment.
Write to Jacob Bunge at jacob.bunge@dowjones.com
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Copyright ? 2012 Dow Jones Newswires
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