Citigroup is planning to file a claim for its piece of the $62m compensation pot Nasdaq is required to dole out after the Facebook IPOcalypse. The bank is all set to apply for the existing compensation, but it's still leaving its other options open, according to the sources whispering to the Wall Street Journal and Reuters. …
The value of investments can go down as well as up.
Do these things not apply to big banks?
I think you're missing the point. It's more like playing a game of Blackjack and saying "stick" at 21 and the dealer dealing you an extra card and saying you busted out, and you saying "hold on a moment, I said 'stick' at 21".
Yes, but it's not about giving money to those idiots who payed too much for the Facebook shares but about a glitch in the system that should not have occurred, but did, even if not for a very long time.
There's several arguments here. In the case of UBS they actually made such a huge loss on Facebook day 1 that it had to be placed in their annual report as material to their results. Apparently they bought 100's of millions of dollars worth of shares. The trade didn't go through, so the trader did what any non-techy would do and just pressed the button again...
Well to be fair they apparently checked the exchange records and they didn't say that they owned any FB stock. So they repeated the trade. A couple of hours later double $100m worth turned up. Oops!
The 2nd argument is that by this point the share price had tanked from nearly $40 a share to the mid-20's. So UBS can say we only bought one lot of shares, you should compensate us for the second lot you foisted on us by your incompetence. Seems a pretty fair argument to me.
The 2nd argument is a bit less clear-cut. Though I'd still be pissed off as a trader. If you had shares at the beginning, but the exchange wasn't working properly, you often weren't able to sell them for hours. Had you been able to, you might have got rid of them at say $35, rather than at $25. But then if the market had been working, who's to say anyone would have bought at that price, once the shares had already lost a load, and were heading South.
I think some people may also claim they hit sell at around $35 share, but the order wasn't processed until it hit $25 a share. It may be that had the market worked, they couldn't have sold, but then if the market had worked, at least they could have decided the shares might go back up, so rather than crystallising the losses, they might have chosen to keep them, and sell later. Shares have been as high as $30 recently, so they'd have got something, if they'd been able to wait.
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