Nasdaq defends Facebook compensation plan in letter to SEC
September 20, 2012 5:21 AM EST
Nasdaq OMX Group Inc stood by its proposed $62 million plan to compensate firms affected by the fallout from Facebook's botched IPO, taking aim at UBS AG, Citigroup Inc and other parties which derided the payback plan.
In a letter to the U.S. Securities and Exchange Commission dated September 17, Nasdaq said the proposed compensation pool "goes well beyond what is required under current Nasdaq rules." It noted that if the proposal is not approved, the applicable limit of liability under the approved rule would instead be $500,000 - less than 1 percent of the proposed pool.
Nasdaq's plan to offer $62 million in cash was an increase from an earlier $40 million payback fund, which was made up mostly of trading rebates.
Nasdaq defended its use of a 45-minute window to determine a benchmark reference price to assess the amount owed on orders qualifying for accommodation.
The company said the time frame "should have been ample time for a reasonably diligent member to identify any unexpected losses or unanticipated positions and take steps to mitigate or liquidate them."
The eight-page letter was signed by Nasdaq Senior Vice President and Corporate Secretary Joan Conley.
(Reporting By Ashley Lau in New York; Editing by Richard Chang)
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