BOSTON Just hours before Facebook Inc made its stock market debut last Friday, Seuk Kim put in a limit order $4 above the initial public offering price.
"I thought it was going to have that first day pop," Kim said. "I didn't think anyone would get in at the $38 IPO price."
Limit orders give investors a measure of protection because the stock is eligible to be purchased at or below the designated limit price, but never above it. The frenzy around Facebook had investors guessing they had to put in limit orders far above the $38 IPO price in order to get in on the action.
It's now clear Facebook's IPO didn't pop, but fizzled.
As negative sentiment against Facebook swirled before trading began, some investors attempted to shift gears, canceling their initial limit orders and placing new ones, but at lower prices.
Widespread delays on Nasdaq OMX Group Inc's U.S. exchange prevented some brokerage clients from canceling their initial limit orders. But they didn't learn until later that had happened, leaving some investors with twice as many Facebook shares than they intended.
That's what happened to Kim, a 36-year-old father of three who lives in Alexandria, Virginia.
Kim learned from the brokerage site run by Charles Schwab Corp he didn't have enough funds in his account to cover both of his buy orders, including the limit order he thought was canceled. The margin call was a shock, to say the least, Kim said.
Friday was his deadline to cover the insufficient funds in his retirement account at Schwab. He could either deliver a check or liquidate some of his holdings in a mutual fund to make up the difference.
Kim said he decided to sell mutual fund shares that were in a loss position.
"I think the brokers were left in the dark as much as we were, Kim said.
A technical glitch delayed Facebook's market debut by 30 minutes last Friday and many client orders were delayed, giving some investors and traders significant losses as the stock price dropped. Nasdaq is facing lawsuits from investors and threats of legal action from brokers.
Fidelity Investments and Charles Schwab Corp, which run two of the largest online brokerages in the United States, said they still are working to resolve customer problems a week after the IPO.
"We've addressed many of the client issues resulting from Nasdaq's problems last Friday, and we are working to resolve any remaining problems as quickly as possible," Schwab spokesman Michael Cianfrocca said.
Vincent Loporchio, a spokesman for Fidelity, said the company is trying to persuade Nasdaq to mitigate the impact of the trading glitch to customer accounts.
"We're advocating on their behalf for a fair outcome," Loporchio said.
Michael Diodata, a 26-year old Best Buy manager from Jackson, New Jersey, said he wanted to "jump into the craze" but canceled his $38 limit order for 100 Facebook shares after changing his mind. He said he received verification from Fidelity his order had been canceled, only to learn later that market delays prevented that from actually happening.
His order was filled and he now owns 100 shares he bought for $38 each. As of late Friday, he was sitting on an unrealized loss of $609, with Facebook's stock closing at $31.91.
"I'm an amateur when it comes to trading," Diodata said.
Still, he said he believes he is being penalized for Nasdaq's problems.
"It's not my fault Nasdaq screwed up," he said.
Nasdaq was not available for comment.
(Reporting By Tim McLaughlin; Editing by Tim Dobbyn)