May 23, 2012

A senior Nasdaq executive told customers that the exchange would have delayed Facebook’s IPO had it known the extent of the technical problems that would disrupt the highly anticipated listing.

Nasdaq failed on the day of the IPO to return order confirmations to some investors for hours and delayed the start of trading by 30 minutes due to problems with its systems.

Nasdaq's comments came as regulators are reviewing the exchange's handling of the listing. They also are examining reports that Morgan Stanley selectively informed clients of an analyst's negative report about the company before the stock started trading.

From the Wall Street Journal:

On a conference call with brokers after Tuesday's close, the Wall Street Journal reports that Eric Noll, Nasdaq OMX Group Inc.'s NDAQ -3.54% head of transaction services, said the exchange "by no means would have gone forward with a print" had Nasdaq believed there would be problems "in continuous trading in a normal trading day."

A "print" is industry parlance for the share price that results from the match-up of orders before trading starts, and is the price at which shares start trading on the open market.

Mr. Noll suggested Nasdaq had underestimated the technical problems. He said the exchange's early interpretation of problems that delayed trading in Facebook shares by 30 minutes was incorrect. "We thought we had a fix," he said on the call.

Nasdaq CEO Robert Greifeld said canceling the Facebook IPO on Friday wasn't considered In comments to The Wall Street Journal following the call, Mr. Noll said, "If we had known that our solution was inadequate, we would have fixed the issue with the right solution before going forward.”

SEC Spokesman John Nester said the regulator will investigate what went wrong with the Facebook IPO.

“As is our practice, staff will review the incident with Nasdaq to determine its cause and steps that will be taken to address it,” he said.

Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in ...