Opinion ID: 2747291
Heading Depth: 2
Heading Rank: 1

Heading: The Facebook IPO

Text: NASDAQ is a publicly‐traded, self‐regulatory organization (“SRO”) registered as a national securities exchange under Section 6 of the Securities Exchange Act of 1934 (“Exchange Act”). See 15 U.S.C. § 78f. It operates “one of the largest national securities exchanges,” executing “approximately 15% of U.S. equity securities transactions every day.” SEC Release No. 34‐69655, 2013 WL 2326683, at . UBS is a registered broker‐dealer and investment adviser, as well as a member of the NASDAQ exchange. 4 On May 18, 2012, NASDAQ was scheduled to conduct the highly‐ anticipated Facebook IPO. The initial Eastern Standard start time of 11:00 a.m. was delayed approximately one half hour, largely due to technical difficulties that NASDAQ encountered with the IPO “Cross,” the computerized system that typically launches IPO trading by matching buy and sell orders to determine the opening price. See id. at , –6. At 11:30:09 a.m., NASDAQ switched to a backup “failover” system that completed the IPO Cross, whereupon “[c]ontinuous trading in Facebook shares then commenced on NASDAQ and other exchanges.” Id. at . The delayed start in trading had certain adverse effects, two of particular relevance here. First, over 30,000 orders entered between 11:11:00 a.m. and 11:30:09 a.m. were not included in the completed IPO Cross. See id. at . These orders were dealt with in various ways, including some being cancelled by NASDAQ and others being released into the market at 1:50 p.m. See id. Second, certain trade confirmation messages for orders placed before 11:30:09 a.m. were not transmitted, as a result of which some “NASDAQ members . . . were not able to determine whether their orders had been included in the cross and, therefore did not know what position they held in Facebook securities.” Id. at . Despite 5 suggestions that it halt trading in the Facebook IPO, NASDAQ did not do so. See id. at .1