| NEW YORK, April 8
NEW YORK, April 8 Citigroup has filed a
claim with Nasdaq OMX Group to potentially receive
compensation for losses associated with Facebook Inc's
glitch-ridden market debut last May, according to two people
with knowledge of the situation.
Citi filed the claim on Monday, which is the deadline for
applications from firms seeking to participate in the $62
million compensation plan, but is still looking at all of its
options, including legal options, said one of the people. They
did not have permission to speak with the media.
A spokeswoman for Citi had no comment, nor did a spokesman
The filing was reported by the Wall Street Journal earlier
Citi's market-making arm lost around $20 million in the May
18 IPO, a source told Reuters in May. That is just a sliver of
the upwards of $500 million that market-making firms - which
facilitate trades, backing them with their own capital - and
brokers lost in the $16 billion IPO.
UBS AG has pegged its losses from the problematic
IPO at above $350 million. It said on March 25 it had already
filed an arbitration demand against Nasdaq to fully recover
losses due to the exchange's "gross mishandling the IPO."
Citi has been highly critical of Nasdaq's compensation plan
as well, saying in a letter to the U.S. Securities and Exchange
Commission in August that the exchange operator should be liable
for hundreds of millions of dollars more.
Liabilities at U.S. exchanges, which have some regulatory
duties, are capped when fulfilling those duties. Nasdaq's cap
for technical glitches is $3 million a month in most instances.
But the New York-based exchange should be fully liable for
all of the IPO losses, Citi argued, because it was operating in
the capacity of a for-profit company during the IPO, and as such
it should not have regulatory immunity.
Citi said in the letter Nasdaq made "grossly negligent
business decisions that caused market participants hundreds of
millions of dollars of losses."