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Is Nasdaq Lying About What It Knew On FaceBook IPO Day?

Tyler Durden's picture


Any investor who can get shares of the Facebook IPO should purchase as many shares as possible, Jim Cramer said on CNBC’s “Mad Money.”


                 -Mad Money, CNBC


Minutes ago we reported that as the WSJ broke an hour ago, the Nasdaq has pronounced a retroactive mea culpa, claiming that had it known back then what it knows now, namely the plethora of technical glitches plaguing its systems, that it would have simply called the whose FaceBook IPO off. Yet we wonder: is the NASDAQ lying? The reason why we are suspicious that the exchange knew all too well just how badly it was overloaded, is the following stunning report from, who else, Nanex, which shows that for a period of 17 seconds, just around the time the FaceBook IPO launched for trade, all "quotes and trades from reporting exchange NASDAQ for all NYSE, AMEX, ARCA and Nasdaq listed stocks completely stopped." In other words: full radio silence. Or, as Nanex wonders, did "Nasdaq panic and reboot major systems to gain control over High Frequency Trading, just before the FB open of trading?" If so, not only was Nasdaq fully aware of the fully technical glitchiness of its systems, but it may well have precipitated even more confusion and more trading errors, resulting in the two hour trade confirm delays first reported on Zero Hedge, all in a mad dash and epic scramble to avoid reputational and monetary damage at the expense of investors.

From Nanex:

Nanex ~ 22-May-2012 ~ Nasdaq Radio Silence

On May 18, 2012 beginning at 11:29:52 and continuing for almost 17 seconds until 11:30:09, quotes and trades from reporting exchange Nasdaq for all NYSE, AMEX, ARCA, and Nasdaq listed stocks completely stopped. In exchange-speak, 17 seconds is 17,000,000 microseconds - an eternity by HFT standards. It's amazing no one noticed.

This was immediately before Facebook began trading.

The charts below show traffic rates for quotes and trades by reporting exchange for all listed stocks in the U.S. carried on the CQS, CTA, UQDF and  UTDF. CQS carries quote traffic and CTA carries trade reports for NYSE, AMEX, and ARCA listed stocks. UQDF carries quote traffic and UTDF carries trade reports for all Nasdaq listed stocks. Facebook (and Apple) quotes would have been carried on UQDF, and trades on UTDF.

Chart 1. CQS (100 ms) showing quote rate from reporting exchange Nasdaq only.

Note how often Nasdaq sends 100,000 quotes per second. Going to zero for even 1 second during trading hours would indicate a problem.

e Nasdaq only.

Chart 3. CQS (100 ms) showing quote rate from all reporting exchanges.

Chart 4. UQDF (100 ms) showing quote rate from all reporting exchanges.

Chart 5. CQS (25 ms) showing quote rate from reporting exchange Nasdaq only. (Zoom of Chart 1)

Chart 6. UQDF (25 ms) showing quote rate from reporting exchange Nasdaq only. (Zoom of Chart 2)

Chart 7. CTA (100 ms) showing trade rate from reporting exchange Nasdaq only.

Chart 8. UTDF (100 ms) showing trade rate from reporting exchange Nasdaq only.


The question: did Nasdaq, in its scramble for bragging rights, and of course, exchange fees, rush out and stumble in order to get Facebook out of the gate as soon as possible, without regard for a properly functioning post-IPO market, just to avoid the reptuational (and monetary) damage associated with pulling a "market conditions?"

We don't know - but we are 100% certain that many lawyers will be asking just that question in the days and weeks to come.


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Tue, 05/22/2012 - 18:57 | 2453151 SHEEPFUKKER

No muppets. No dice. 

Tue, 05/22/2012 - 19:02 | 2453168 CrazyCooter
CrazyCooter's picture

I love the smell of napalm in the morning!



Tue, 05/22/2012 - 19:10 | 2453193 Xkwisetly Paneful
Xkwisetly Paneful's picture

Two functions of an exchange are price discovery and insuring counter party risk.

Between this and MFA it makes me wonder whether these things should be called exchanges anymore. They are not fulfilling the basic functions, how can they be considered exchanges?

Tue, 05/22/2012 - 19:57 | 2453353 Winston Smith 2009
Winston Smith 2009's picture

Exactly.  The should now be called casinos.

Wed, 05/23/2012 - 04:21 | 2454167 Karl von Bahnhof
Karl von Bahnhof's picture

Casinos, no music, no free potato chips, no large breasted waitresses ... 

Tue, 05/22/2012 - 20:28 | 2453447 slewie the pi-rat
slewie the pi-rat's picture


i mean, nope!

Wed, 05/23/2012 - 02:30 | 2454091 The Proletariat
The Proletariat's picture

The first rule (actually the 2nd rule also) of Project Mayhem is, "you do not ask questions"......

Tue, 05/22/2012 - 19:09 | 2453194 SilverTree
SilverTree's picture

Let us all bow our heads for 17 seconds of silence. 

Tue, 05/22/2012 - 19:17 | 2453219 Max Fischer
Max Fischer's picture



I think it's important to post the ENTIRE Jim Cramer quote, not just the out-of-context portion.

"In short, stay the heck away from Facebook on Friday. The moment the market opens, Facebook will immediately enter a no buying zone.”  - Jim Cramer


Tue, 05/22/2012 - 19:19 | 2453231 vast-dom
vast-dom's picture

back to your facile shitty moovie!

Tue, 05/22/2012 - 19:21 | 2453236 Max Fischer
Max Fischer's picture



How did you get an up arrow at the exact moment of your posting?


Tue, 05/22/2012 - 19:22 | 2453241 vast-dom
vast-dom's picture

same way u just got a red one -- back to ur facile moovie!

Tue, 05/22/2012 - 19:23 | 2453248 Max Fischer
Max Fischer's picture



and another one!



Tue, 05/22/2012 - 19:50 | 2453333 ChrisFromMorningside
ChrisFromMorningside's picture

Harry Potter vs. a big-headed black-and-white version of Charlie from "It's Always Sunny". Get a room you two.

Tue, 05/22/2012 - 19:23 | 2453250 Global Hunter
Global Hunter's picture

You and your Harry Potter avatar self need to stop taking the arrows personally.

Tue, 05/22/2012 - 19:28 | 2453264 Max Fischer
Max Fischer's picture



Take it personally?  If I did, I certainly wouldn't keep posting.  I get more red than anyone.

I just wanted to make sure the other poster is aware that it's exceedingly obvious when he green-arrows himself within seconds of his comment being posted. 

Maybe he's not aware of how those arrows are suppose to be used?? 


Tue, 05/22/2012 - 19:37 | 2453294 Global Hunter
Global Hunter's picture

I just gave you a green one...mind you I'm not aware of how those arrows are supposed to be used.

Tue, 05/22/2012 - 20:00 | 2453361 Alea Iactaest
Alea Iactaest's picture

You only get more red than anyone b/c MDB and Robo are gone. And Trav. But you really aren't in their league.

Tue, 05/22/2012 - 20:13 | 2453405 I am a Man I am...
I am a Man I am Forty's picture

i green arrow my own comments, only the ones i am especially proud of though, which thus far, is all of them

Tue, 05/22/2012 - 20:26 | 2453445 jomama
jomama's picture

hate to break it to you, but you're not even the best of the worst.

Tue, 05/22/2012 - 22:24 | 2453739 samwell
samwell's picture

JIIIIIIM is that you?

Tue, 05/22/2012 - 21:37 | 2453534 bobola
bobola's picture

Any investor who buys shares of the Facebook IPO, based on Cramer's recommendation, will understand why he is generally ignored by the average investor.  

              Leonard the wonder monkey

Tue, 05/22/2012 - 19:25 | 2453258 Everybodys All ...
Everybodys All American's picture

Let me be the first to point out that JC is crooked and any defense of this jerk is reprehensible. You might be a nice fellow yourself but defending Cramers calls willl not buy you any friendship here.

Tue, 05/22/2012 - 19:47 | 2453321 ChrisFromMorningside
ChrisFromMorningside's picture

Cramer is a clown. He himself has pointed out that, like over-the-phone psychics, his song-and-dance routine is for entertainment purposes only.

He actually said to BUY the IPO if you had access, but to stay away once trading began. Anyone who took his advice and bought at the IPO price has already lost over 10% of their value so he is still a complete dolt, despite the clarification on his quote.

Tue, 05/22/2012 - 20:03 | 2453376 jackinrichmond
jackinrichmond's picture

my favourite cramer video    

shows you what a true dirtbag he really is.

Tue, 05/22/2012 - 23:24 | 2453843 realtick
realtick's picture

scumbag also

Tue, 05/22/2012 - 22:23 | 2453736 samwell
samwell's picture

Jim is that you?

Tue, 05/22/2012 - 19:09 | 2453188 vast-dom
vast-dom's picture



Tue, 05/22/2012 - 19:14 | 2453209 rocker
rocker's picture

If everybody who reads ZH shorted 1000 shares of the QQQ it would be a sure bet that they go up 100 points tomorrow.

That's how it works. That's what HFTs do.  But as my Scottrade broker said. They are investors too.  LOL


Tue, 05/22/2012 - 19:38 | 2453299 malikai
malikai's picture

They are. They invest in sucker termination.

Tue, 05/22/2012 - 20:21 | 2453428 Bastiat
Bastiat's picture

It's the anti-Cramer !!!

Tue, 05/22/2012 - 19:30 | 2453271 JohnKozac
JohnKozac's picture

'If you can't trust Wall Street, who can you trust?'

Wed, 05/23/2012 - 01:23 | 2454031 Darth..Putter
Darth..Putter's picture

And Nixon needed a full 18minute for shenanigans.  Ah sweet technological progress.

Tue, 05/22/2012 - 18:58 | 2453153 Trimmed Hedge
Trimmed Hedge's picture




Tue, 05/22/2012 - 19:00 | 2453160 francis_sawyer
Tue, 05/22/2012 - 19:01 | 2453165 Rainman
Rainman's picture

A MegaMillions getting hit by white lightning !

Tue, 05/22/2012 - 18:58 | 2453155 Sam Clemons
Sam Clemons's picture

It doesn't take a brain trust to figure out why FacePlant is crashing.  It is a FREE website that is going to become increasingly annoying.

Tue, 05/22/2012 - 19:09 | 2453190 Caviar Emptor
Caviar Emptor's picture

...Annnd...Zuckerberg got married. Kiss 'o Death. Look what happened to Gates post wed: smiling philanthropist and kitchen table philosopher...walked away from Vista train-wreck. These companies work for as long as the BSD is hungry. It's all over once they're fat and nice and they start talking about their little brown brothers...

Tue, 05/22/2012 - 19:19 | 2453232 Global Hunter
Global Hunter's picture

I wouldn't refer to Gates as a philanthropist, he's the guy who pays for the NWO program of vaccines and sterilization drugs for people with dark skin.

Tue, 05/22/2012 - 19:23 | 2453245 Sam Clemons
Sam Clemons's picture

Who doesn't want monkey fetus cancer cells injected into their body to prevent a disease that has been erradicated through increases in living standards?

Wed, 05/23/2012 - 01:04 | 2454003 Oh regional Indian
Oh regional Indian's picture

Sam, hope you saw my prognostication. 


Tue, 05/22/2012 - 19:28 | 2453265 Joe The Plumber
Joe The Plumber's picture

Good for him. Egypt is already a stinky, poor, overcrowded welfare case. Whats it gonna be like with double or triple the population?

Bangladesh.... Dont forget them either. Make those brown fuckers stop after two kids like refined civilized people do

Tue, 05/22/2012 - 19:35 | 2453285 Global Hunter
Global Hunter's picture

I hope that is sarcasm Joe!  If not poisoning people and taking away their reproductive abilities on false pretenses and promises should be the job of no man.

Tue, 05/22/2012 - 20:29 | 2453339 francis_sawyer
francis_sawyer's picture

on a long enough timescale... (Waddell & Reed get their mitts into everything)...

Tue, 05/22/2012 - 19:23 | 2453249 Trimmed Hedge
Trimmed Hedge's picture

The Gates marriage will last their lifetimes.

The Zuckerberg marriage will not.



Wed, 05/23/2012 - 07:42 | 2454295 amanfromMars
amanfromMars's picture

And now for something completely different, although hardly any less controversial in the gender game.

I wonder if the bride had to sign a romantic pre-nuptial which denies her access to a lioness's half share of her hubby's fortune should things not work out as they might have planned and/or expected? 

Not that I would be at all interested, but it is surely something which many would be wondering if Mark thought was necessary.

Tue, 05/22/2012 - 19:33 | 2453281 ChrisFromMorningside
ChrisFromMorningside's picture

My only question is ... When's the Twitter IPO? They've got revenues of $150 million. That means the IPO should be valued at a cool $200 billion. Then maybe Morgan Stanley can roll out the Tumblr IPO for $300 billion.

Damn ... Sorry, our culture is completely tapped out of creativity if these web-fluff companies that don't even generate profits are the best thing going for the U.S. economy. They're just variations on ad-serving mediums.

I guess the real tragedy is that they're not the best thing going. There are a lot (okay, maybe not A LOT, but a decent number) of capable individuals out there with good ideas (that are centered on, you know, actual physical commodities and services ... instead of eyeball-counts) but they're going nowhere when we have hundreds of billions of dollars in capital being misallocated into these fluff companies for no real reason other than pathetic media hype. Shame.

Tue, 05/22/2012 - 22:33 | 2453758 BooMushroom
BooMushroom's picture

Sad as fuck. Unfortunately, the Internet is the least regulated industry in the US, so that's where the creative people are going.

Tue, 05/22/2012 - 22:40 | 2453775 Common_Cents22
Common_Cents22's picture

FACEPALM has an every growing mobile base with zero revenue.   smart phones and tablets running on phoneOS hurt.    Come up with a way for Facepalm to monetize mobile and you too can be a billionaire.

Tue, 05/22/2012 - 18:58 | 2453157 resurger
resurger's picture

i dont trust teh lawyers either ...


Tue, 05/22/2012 - 19:04 | 2453175 Papasmurf
Papasmurf's picture

who needs lawyers when you have politiciains?

Wed, 05/23/2012 - 03:13 | 2454120 Oh regional Indian
Oh regional Indian's picture

How convenient then that most politicians are Lawyers.


Tue, 05/22/2012 - 19:00 | 2453159 Haole
Haole's picture

They were not aware... Whole exchanges philosophically Corzine'ing now...

Tue, 05/22/2012 - 20:03 | 2453374 Alea Iactaest
Alea Iactaest's picture

This whole NASDAQ thing? Seems to me that the BATS hackers were simply getting even for what was likely a hit during their IPO.

Tue, 05/22/2012 - 21:31 | 2453604 UP Forester
UP Forester's picture

Maybe NASDAQ was trying to "Blue Screen of Death" the HFT computers....

...without realizing the HFT computers can travel backwards in time.

Tue, 05/22/2012 - 19:02 | 2453169 asteroids
asteroids's picture

OMG! Someone did a BATS. If the SEC doesn't get a handle on this, the crash is coming.

Tue, 05/22/2012 - 19:07 | 2453187 SilverTree
SilverTree's picture

I think even if they do get a handle on it it will crash anyway.

Tue, 05/22/2012 - 19:17 | 2453218 blunderdog
blunderdog's picture

If a market crashes but no quotes are transmitted, does it cause any losses?

Tue, 05/22/2012 - 19:41 | 2453303 dark pools of soros
dark pools of soros's picture

is liquidity still being created?  that's all the gains they care about

Tue, 05/22/2012 - 21:53 | 2453669 TheFourthStooge-ing
TheFourthStooge-ing's picture

asteroids exclaimed:

OMG! Someone did a BATS. If the SEC doesn't get a handle on this, the crash is coming.

The only time the SEC gets a handle on anything is when they're watching midget tranny porn during "working" hours.


Tue, 05/22/2012 - 19:03 | 2453171 sunxpert
sunxpert's picture

Probably just stopped everything else to let the FB orders get in/out. Very much like a DDOS attack..

Tue, 05/22/2012 - 19:04 | 2453177 navy62802
navy62802's picture

It's amazing no one noticed.


No, it isn't. Because no one who matters is looking.

Tue, 05/22/2012 - 19:04 | 2453178 SILVERGEDDON

Does a bear shit in the woods ? Is the Pope Catholic ? Are the Wall Stereet firms crooked ? 

Why should you bury JP Morgan, Goldman Sachs, and Morgan Stanley eighteen feet deep ? Because deep down, they're good people.

Wed, 05/23/2012 - 00:15 | 2453936 Tijuana Donkey Show
Tijuana Donkey Show's picture

A bear shits in the woods, as long as he isn't in a zoo, the Pope isn't Catholic for the 2 hours a day he's with the choir boys, and Wall St. isn't crooked, it just has a vicious lean. 

Tue, 05/22/2012 - 19:07 | 2453186 Dr. Engali
Dr. Engali's picture

Machines fucking over machines. The end is in sight.

Tue, 05/22/2012 - 19:21 | 2453238 Sam Clemons
Sam Clemons's picture

Weird how each consecutive paper bubble blown in the US has garbage IPOs.. However, I think FacePlant takes the cake of worthlessness, and in twenty years could be recognized as the beginning of the end and the coups de gras for this phony consumer based economy.

Tue, 05/22/2012 - 19:10 | 2453195 RECISION
RECISION's picture

What... pass off all risk and loses to the retail invester...?


Tue, 05/22/2012 - 19:10 | 2453196 lemonobrien
lemonobrien's picture

so you're say'n its all manipulated? nah...

Tue, 05/22/2012 - 19:12 | 2453203 fonzannoon
fonzannoon's picture

I'd rather own something like silver and stay away from the manipulated stuff.

Tue, 05/22/2012 - 19:13 | 2453207 A_MacLaren
A_MacLaren's picture

Too bad NASDork isn't as smart as Neo in the Matrix and notice the Déjà vu.

And OMG - Kaliphonia was DEPENDING on ever high Facebook prices for capital gains taxes...

California's budget could take a hit if Facebook's stock price keeps sliding.

Gov. Jerry Brown estimated the state will generate between $1.4 billion and $1.9 billion over the next 13 months from taxes related to sales of Facebook stock. The estimates were based on prices at $35 per share.

Facebook went public Friday at $38 per share but was trading below $32, or 15 percent below its IPO price, on Tuesday afternoon.

Deputy Legislative Analyst Jason Sisney says the "potential hit from Facebook's share price is nothing compared to the potential damage from a broader stock slump."

Last week, the nonpartisan Legislative Analyst's Office warned that a number of uncertainties could cause the state's deficit to be "several billion dollars" higher or lower than the governor's $15.7 billion estimate.

Ponzi-Matrix Breakdown.

Buckleup Bitchez.

Tue, 05/22/2012 - 19:18 | 2453227 rocker
rocker's picture

That's too funny. 

Wed, 05/23/2012 - 00:43 | 2453969 Freddie
Freddie's picture

The whole thing is a Democrat taxation scam/fraud.  Everyone at FB is buddies with Obama and the DNC plus they are donors and bundlers to Obam 2012 and 2008.  The goal was to get suckers in to pump up this fake pig.  Get suckers in flyover country to buy this dog sh*t stock.

Transfer small investors money to his cronies and gnerate tax revenue to bailout Mexifornia for another 5 or 6 months.

Wed, 05/23/2012 - 07:37 | 2454289 kralizec
kralizec's picture

Ding! Ding! Ding!

We have a winner!!!

(Cannot give you enough up arrows dude!)

Tue, 05/22/2012 - 19:22 | 2453243 tim73
tim73's picture

HA HA! This shit is just getting better and better! Silicon Valley...many divorced silicon blonds at bottom prices soon available!

Tue, 05/22/2012 - 19:29 | 2453268 Global Hunter
Global Hunter's picture

So people will have some capital losses to offset other capital gains in unrelated investments that again the state was counting on bwahahaha

Tue, 05/22/2012 - 19:38 | 2453300 imapopulistnow
imapopulistnow's picture


Tue, 05/22/2012 - 20:02 | 2453373 Ineverslice
Ineverslice's picture

"As Governor (of CA), I feel that it is of the utmost importance that we embrace the Facebook employees..."

And it's gone....

Tue, 05/22/2012 - 20:41 | 2453486 I am a Man I am...
I am a Man I am Forty's picture

i could write a paper on how dumb this is

Tue, 05/22/2012 - 19:14 | 2453212 KandiRaverHipster
KandiRaverHipster's picture

this is completely bogus.  if it can handle HFT on days with huge volume, why would it have issues on this IPO?

Tue, 05/22/2012 - 19:22 | 2453244 rocker
rocker's picture

Please be serious. What they, (HFTs, including GS, JPM, and other trading desk), did was flood the ticker with orders, cancellations, more orders, more cancellations, until they took it to where they wanted to cash out and then left before the smoked cleared.  This is what they do and how front running works.

Tue, 05/22/2012 - 20:31 | 2453457 KandiRaverHipster
KandiRaverHipster's picture

i was being serious!

Tue, 05/22/2012 - 19:24 | 2453255 navy62802
navy62802's picture

I'm sure this is a question that regulators will be asking. Or at least they would be if they weren't so fucking corrupt.

Tue, 05/22/2012 - 19:16 | 2453217 tim73
tim73's picture

This FB crap is going to burn all IPO plans based on any kind of social networking, onesome masturbation scheme in the InterNutz. HA HA!

Tue, 05/22/2012 - 19:17 | 2453220 ragequit
ragequit's picture

+1 jim cramer quote


i laughed heartily

Tue, 05/22/2012 - 19:18 | 2453224 Debtless
Debtless's picture

Let the robots destroy each other...I'm going fishing.


Tue, 05/22/2012 - 19:59 | 2453360 ThirdWorldDude
ThirdWorldDude's picture

have fun & watch out for predators!

Wed, 05/23/2012 - 00:22 | 2453944 Tijuana Donkey Show
Tijuana Donkey Show's picture

drones or fish?

Wed, 05/23/2012 - 08:44 | 2454404 mvsjcl
mvsjcl's picture

In a canoe? With shiny ballast?

Tue, 05/22/2012 - 19:24 | 2453226 nonclaim
nonclaim's picture


Tue, 05/22/2012 - 19:21 | 2453237 dcb
dcb's picture

I called my brokerage that morning to talk about sunny stuff. there was a 30 minute wait because of facebook they said. I have been reporting funny business to them a few times I'm sure with no result.

Tue, 05/22/2012 - 19:22 | 2453246 JackT
JackT's picture

OK fine let's say NASDAQ went radio silent the day of. How does that explain the continued collapse in price, or why the underwriters are fading away post-IPO. Seems to me there is no faith in the value of the stock.

Wed, 05/23/2012 - 00:47 | 2453981 Freddie
Freddie's picture

It is a bogus cover story.  The stock was always garbage. It was to scam small investors and scare up money for Callie-PORN-ia.

Tue, 05/22/2012 - 19:24 | 2453254 user2011
user2011's picture

Facebook is making claim of 800million active users.      The world has 7 billion people, actively breathing people.   China ban facebook, so, 1.3 billion can not access facebook.   

Then we have children under the age of 12... who are not allow to join facebook.   That should be 1 billion

Then we have elderly who don't know how to use internet.

Then we have adults who are too poor to have internet.  ( people who make less than 1 dollar a day)

And then there are people like me who has 4+ FB accounts.  

Shouldn't the stock be single digit by now ?



Tue, 05/22/2012 - 20:03 | 2453348 Winston Smith 2009
Winston Smith 2009's picture

Just give it a few weeks.

Tue, 05/22/2012 - 20:28 | 2453451 Bastiat
Bastiat's picture

You left out people like me who can afford all the net access I want but wouldn't touch FB.  Fuck 'em.

Tue, 05/22/2012 - 19:26 | 2453260 booboo
booboo's picture

Maybe William B. should do a parity on "Real Steel" or Reel and Steal, bots boofooing bots

Tue, 05/22/2012 - 19:26 | 2453261 moofph
moofph's picture

...silence of the lambs...or better yet, do androids dream of electric sheep?

(even las vegas has less risk)...wall street is just one big group of failures owning failed debts/digits/ now represents (and they know this) epic failures in policy, regulation, forsight, hindsight...and like a gambler, still believing that they will win and others will lose.

welcome to the land of by vipersssssss.

Tue, 05/22/2012 - 19:28 | 2453263 ArrestBobRubin
ArrestBobRubin's picture
Is Nasdaq Lying About What It Knew On FaceBook IPO Day?

Oh, I dunno, is Whinin' Dimon lying about the extent of JPM's losses and exposure to more?

Jamie Dimon Complains More, As JPMorgan Chase Losses Eclipse $30 Billion

Posted: 05/21/2012 12:23 pm


Champion American complainer Jamie Dimon complained on Monday about Wall Street regulation, while also insisting he not be described as a complainer. All the while, his bank's losses, partly resulting from lax regulation, continued to grow.

An initial $2 billion trading loss has likely resulted in a total loss of more than $30 billion, when you include a 19 percent drop in the bank's stock price. By itself, the trading loss alone might balloon to more than $6 billion, according to one estimate.

To strengthen the Cognitive Dissonance Vortex he had created, the JPMorgan Chase CEO's comments came as the ink was still drying on news reports that reminded everybody of why the Wall Street regulation he complains about constantly is necessary in the first place. Namely, the Wall Street Journal reported that a top risk-management officer at JPMorgan apparently had a spotty track record of risk-management. And CNNMoney said estimates of the bank's initial $2 billion loss due to poor risk-management have tripled to at least $6 billion….




Tue, 05/22/2012 - 19:29 | 2453269 Mudja
Mudja's picture

17 seconds was all it took for the insiders to dump their stock. This should be an outrage - suspending the entire exchange operation like this.

But no, it was a "technical malfunction".

Btw, apparently Zucker's wife has a marriage agreement, dictating when - if - they have sex. That's just lawl.

Tue, 05/22/2012 - 22:03 | 2453700 Ident 7777 economy
Ident 7777 economy's picture




"technical malfunction" - nice cover ...




Tue, 05/22/2012 - 19:31 | 2453273 El_Puerco
El_Puerco's picture

“The Bottom line here is, accounting fraud, is now Wall Street business model "...

" El que sabe, sabe, el que no, es jefe "....

Tue, 05/22/2012 - 19:30 | 2453274 Shizzmoney
Shizzmoney's picture

We don't know - but we are 100% certain that many lawyers will be asking just that question in the days and weeks to come.

And then forget about those questions when the big bankers take them out to Morton's after for counsel.

Tue, 05/22/2012 - 19:31 | 2453278 tim73
tim73's picture

I'd bet this was the last straw for many small stock market investors. Brokers probably are getting an earful. Many got burned badly and they are not coming back for years if ever. Very similar to 1930-1932 bounce and dive of Dow Jones.

Tue, 05/22/2012 - 21:11 | 2453557 johnnynaps
johnnynaps's picture

Too bad there's a sucker born every second nowadays!

Tue, 05/22/2012 - 19:31 | 2453280 imapopulistnow
imapopulistnow's picture

I generally disregard conspiracy theories.  But this one smells all over.  Doubt the truth will ever come out though.

Tue, 05/22/2012 - 21:12 | 2453562 johnnynaps
johnnynaps's picture

Where to start with the theories on this one!

Tue, 05/22/2012 - 19:36 | 2453282 Everybodys All ...
Everybodys All American's picture

This was a simple Denial of Service attack. Wonder why confirms and other orders were lost. The message system became overloaded with normal garbage from the HFT's and then you add in everyone else panicking and wallah you have collapsing price of FB and a pancaking price. Many of the orders more than likely had to be flushed and placed back in later in order to restore the system.

Tue, 05/22/2012 - 19:34 | 2453287 imapopulistnow
imapopulistnow's picture

The most tragic aspect is that no one has the courage to stop this crap.  They will destroy our civilization and no one is going to do anything about it.  Mary Shapiro?  WAF'kn joke.

Tue, 05/22/2012 - 19:35 | 2453288 rumblefish
rumblefish's picture

am i missing am something. i just assume there is no demand because the company is overrate and over hyped. is there a suggestion that a 3 party is to blame for the share price decline?

Tue, 05/22/2012 - 19:54 | 2453344 Confused
Confused's picture

overrated and over hyped? You mean like chipotle or a million other companies that couldn't possibly trade where they are based on what they actually produce?

Tue, 05/22/2012 - 19:37 | 2453293 Fox-Scully
Fox-Scully's picture

Not to worry, Eric Holder will be investigating--only in your fondest dreams!

Tue, 05/22/2012 - 20:07 | 2453307 TraderStef
TraderStef's picture

What about the multiple 17 minute time frames that occured in-between large single buy volume spikes on the 1min chart opening day between 12:30pm and 2:30pm  ?!  Algos.

Tue, 05/22/2012 - 19:50 | 2453322 lizzy36
lizzy36's picture

What happens to capital markets, which are predicated on accessing "public money", when public money no longer wants access to capital markets.

The way capital markets work:

-from CEO's (those same CEO's who get bonused on profitability and paid in their own stock)exerting pressure on analysts to raise targets in exchange for corporate finance fee's 

-from corporate finance exerting pressure on analysts to raise targets estimates and ratings, in order to get financings (and commissions attacheted thereto)

-to analysts who are willingly to sell their credibility for their bonuses, by going along with companies and corporate finance

-from CEO's who fire tens of thousands, lose 20%-100% of shareholders value and get paid multiples of millions of dollars

-to stock exchanges that are no longer functioning to exchange/clear stock but rather as some conduit for HFT computer games

-to the main stream financial media who serve their coporate overloads rather than the public

-to the politicians whose main sponsors are financial service and thus are completely ineffective when it comes to matter of what is good for the investing public vs what is good for financial services

TO all of that and pages more......Public money is saying "how about a nice game of chess".

Tue, 05/22/2012 - 19:50 | 2453330 Chippewa Partners
Chippewa Partners's picture

I bet 99% of Morgan Stanley pimps, I mean stockbrokers are looking to run for the first firm who will cut them a check.

Tue, 05/22/2012 - 19:52 | 2453338 Winston Smith 2009
Winston Smith 2009's picture

Perhaps if the didn't allow the HFT crap, they wouldn't be so overloaded?

Tue, 05/22/2012 - 20:00 | 2453364 Westcoastliberal
Westcoastliberal's picture

A Nixonian gap at best. What are they hiding? Let the speculation begin!

Tue, 05/22/2012 - 20:03 | 2453375 highwaytoserfdom
highwaytoserfdom's picture

never mind that these bankers put together the 11 billion dollar club deal to controle the software with these crony capital   clowns  Silver Lake Partners, Bain Capital, Blackstone Group, Goldman Sachs Capital Partners, Kohlberg Kravis Roberts & Co., Providence Equity Partners, and Texas Pacific Group. all receive the money from the primary dealers..   Does  not matter if it is the DNC PE firms or RNC firms... The market is rigged and people have access first.  We have know one to blame but ourselves.. buy electing politicians that set rules and force savings in mutual and pensions middle men will always sponge off ignorance. Private Equity Antitrust Litigation, media, medical, education. millitary trust busting is in order.    

Tue, 05/22/2012 - 20:10 | 2453398 insanelysane
insanelysane's picture

Definitely a reboot and then they had to "layer" in all of the trades cached during the 17,000,000 milliseconds.  The "layering" must have taken the 2 hours and was an attempt to make the activity look normal.  

They need to come clean because if they don't, some might arrive at the conclusion that they "reordered" the trades so that the big firms received preferential sequencing.

Tue, 05/22/2012 - 20:15 | 2453410 max2205
max2205's picture

Most quote systems and charts were dead or just wrong 2 hours after Facedouche started 'trading'

Tue, 05/22/2012 - 20:18 | 2453411 Convolved Man
Convolved Man's picture

17 seconds?  Very interesting.

Let's apply Google to this bit of evidence...


The Principle of Focused Attention.

 The Principle of Focused Attention is a Universal law. This principle says that a thought reaches a combustion point at 17 seconds of pure undiluted focus. As we all know, thoughts usually follow one after another. So if there is a second thought that is in alignment with the first, the effect is exponentially more powerful. At the end of 17 seconds or 34 seconds, the next thought combusts. With 34 seconds of pure focus, it evolves to a higher level of energy. Add another 17 seconds, 34 seconds become 51 seconds and so on and so forth. If this string of thoughts is directed systematically and constructively, the energy vibrates at a frequency that draws the desired outcome and brings it into physical reality.


Well, it's obvious from this research why things fell apart. The train of thought at the NASDAQ was interrupted.

Let's see you try to drill down to facts with Facebook.

Tue, 05/22/2012 - 20:17 | 2453416 capitalkid
capitalkid's picture

Nanex's whole analysis is pointless because they are looking at the UQDF/UTDF feeds (CQS/CTS).

Nobody in HFT uses those feeds because there is a synchronization delay imposed by the CQS sequencer, we use the direct exchange feeds.


I double checked, and there was no "radio silence" on the direct INET ITCH feed.  NASDAQ was not "rebooting all servers" or other such nonsense.

Tue, 05/22/2012 - 21:33 | 2453608 nanex
nanex's picture

You keep repeating a lie often enough, and the new young punks will believe it.


Routing based on direct feeds violates Reg NMS. But don't take my word for it, take Nasdaq's. A rule change proposal they tried to sneak through last August:


\5\ The Exchange is also changing its policies and procedures under Regulation NMS governing the data feeds used by its execution system and routing engine. Current policies state that those systems use data provided by the network processors. In the future, those systems will use data provided either by the network processors or by proprietary feeds offered by certain exchanges directly to vendors.


The network processors are CQS/UQDF. Note the "current policies". 


Yes we all know they route based on direct feeds. But that's a Reg NMS violation, and they should be fined for it. Every once and a while an exchange is -- ask Direct Edge about that.


Thanks for verifying Itch was fine. This just may be the case allowing any Attorney out there to drive a truck right through this charade.


Your comment about a "synchronization delay imposed" -- thanks for the laugh. You don't really know how it works and probably just spouting the propaganda non-sense.

So how come we just don't throw Reg NMS out the window? Oh, what's that you say? Then you'd have to actually program your computers to understand real-world economics pricing, instead of jamming arbitrage opportunities from the new young and dumber coming to the game.


Face it, the Facebook event is going to change the HFT game forever. There's no way the SEC will be able to hide behind this one.


We know this analysis is pointless from a HFTs point of view. We point this out as a supporting fact of what should be obvious to many: the systemic, SEC sanctioned, organized corruption that is destroying the very fabric of an economics based stock exchange.


So tell me, smart guy, what caused the 17 seconds of silence ? 


Oh, you do realize that internalizers (you know the guys who match all of etrade/ameritrade customer orders) use <gasp> CQS/UQDF to fill orders, but buy/sell with the direct feeds. That sound fair?




Tue, 05/22/2012 - 22:26 | 2453742 capitalkid
capitalkid's picture

Sorry if I hit a sore spot -- I didn't intend to come across as confrontational (but re-reading my message, it clearly had a biting tone).

To respond to your specific questions:

  1. Yes, I know exchanges are required to route away to the NBBO as determined by CQS, unless the order is marked as ISO.  I do not work at an exchange, so I have no idea whether or not exchanges actually use CQS as they should under Reg NMS.  In any case, I never claimed they do or they don't.
  2. Why did you laugh about the synchornization delay comment?  I was merely stating that CQS is a synchronized quote feed, so there is going to be some delay.  That delay is acceptale to most people.  For the few firms that want data as soon as it is available, and are willing to code their own synchronized book, then using direct exchange feeds is the way to go.
  3. I would never suggest we through Reg NMS out the window.  I think it is important to ensure retail investors get the best quoted price.  If institutional investors want to side step Reg NMS for whatever reason, they are always free to use ISO orders.
  4. I have no idea what caused the 17 seconds of silence on the CQS feed.  Perhaps it was simply some switch at Carteret that affected outbound CQS/CTS feeds and not direct exchange feeds.  I don't know, nor do I claim to know.
  5. I was not aware that anyone could "use CQS/UQDF to fill orders".  Since it is a data-only feed, not a matching engine.  If you're suggesting that they are doing internal matching against other customers based on CQS quotes, then no, I did not know that, and if true would of course not be fair.  I know NYSE rules require brokers to submit crossed orders to the exchang and always trade against a distinct counterparty.  

I'm not "against Reg NMS" or "against CQS/CTS/SIAC/UQDF/UTDF".  If brokers are frontrunning clients because of a CQS / Direct feed mismatch, that's wrong, and I'd hope regulators would be on the lookout for such stuff.  Perhaps that's wishful thinking.


all the best,

'never claiming to be smart' guy

Wed, 05/23/2012 - 09:13 | 2454489 fuu
fuu's picture

2 years 1 week and this is your second post, your first one is upthread. I smell bullshit right here.

Wed, 05/23/2012 - 09:32 | 2454554 capitalkid
capitalkid's picture

I'm sorry if I me never posting before has offended you.


And what BS are you smelling?  I've made zero claims ...  The only thing I've done is state that the INET ITCH feed had no 'radio silence'.


I'll go back to 'never commenting' mode, since people are way too touchy here ...

Wed, 05/23/2012 - 14:58 | 2456084 nanex
nanex's picture

Can you email us a small snippet of that itch data between 11:29:52 and 11:30:09 ? Nasdaq told CNBC that Itch was also affected. Thanks.

Thu, 05/24/2012 - 00:41 | 2457857 capitalkid
capitalkid's picture

I'm sheepishly correcting my assertion that ITCH was unaffected.  It was.  My lame excuse is that i quickly converted 11:29:52 to a millisecond timestamp of 41392000 and found many many quotes coming from ITCH with 0 delay.

... and of course that's because the delay didn't start until 11:29:52.499 (e.g. a 4132499 ms timestamp)

There was a 16705 ms gap.  What is interesting, is that subsequent quotes were sent with zero delay.  This indicates that there was not a queue backlog -- at all -- there simply was no processing.  This would be consistent with a system reboot rather than network glitches which would cause delayed data.

Here is an example of the gap:


A   41392505    41392504    INET        RRD 10.32   0   117226215   Y

A   41409210    41409209    INET        GE  18.99   0   115740608   Y

So, I owe Nanex an apology.  It was not 'nonsense' to say they were rebooting servers. And here I was thinking I finally had something to contribute back to Zerohedge after 2 years of radio silence.   I'll crawl back into my hole and try to convince myself that I'm at least a man that admits his mistakes.
Wed, 05/23/2012 - 16:12 | 2456386 fuu
fuu's picture

For years your account sits there with not a single thing said on any topic.

Then this article comes up and you feel the need to jump in with, "Nanex's whole analysis is pointless".


Thu, 05/24/2012 - 00:49 | 2457874 capitalkid
capitalkid's picture

Ok ... are you claiming some conspiracy or something?  I just don't get your logic.

What's more likely:

1) I created an account 2 years ago with future knowledge that I'd post this week about Facebook's IPO?

2) I created an account 2 years ago, and only this week did I believe I actually had something worth sharing [which ultimately turned out to be incorrect data]


So, what's bullshit, and why?  Is it really that outrageous to think that HFT firms are impacted by direct exchange feeds and not CQS?

I don't know man.  I'm sorry I got under your skin for whatever reason.  I'm open to criticism and will gladly admit when and where I'm wrong, but I just won't ever conceed to faulty logic.

Wed, 05/23/2012 - 02:31 | 2454092 BeetleBailey
BeetleBailey's picture

+100. Excellent explanation nanex

Tue, 05/22/2012 - 20:25 | 2453438 q99x2
q99x2's picture

Where can I buy a computer that reboots in 17 seconds? Or, even a router? Switch probably.

Tue, 05/22/2012 - 23:23 | 2453839 afton
afton's picture

no problem for a virtual machine....

(switches, Especially ones using spanning tree protocol, will not reboot in 17 seconds)

Tue, 05/22/2012 - 20:31 | 2453459 q99x2
q99x2's picture

Lindsey Wagner talked about everything that was on ZeroHedge in realtime. He's selling a CD because he says an "Elote I mean Elite" told him. I don't need his CD. Got ZH.

He says Elite's currency is Gold and Silver. "They've long gotten our of paper."


Tue, 05/22/2012 - 21:15 | 2453567 geewhiz190
geewhiz190's picture

The underwriters are, as of today, still holding the proceeds from the offering.  There should be a halt in trading so the IPO can be busted and the money returned to the buyers. All trades should be canceled and any aftermarket trades should be undone. This can be done and has been done at least twice before.  Ohterwise NASDAQ, the underwriters, and the system in general, will lose whatever little credibility remains in this broken market system we have.  let FB come back in 6 months and try it again if they want to reprice the deal and redo the prospectus.

Tue, 05/22/2012 - 21:21 | 2453585 alien-IQ
alien-IQ's picture

Begin filing class action law suits in 5...4...oh's done:


Investors sue Nasdaq, Facebook over IPO


May 22 (Reuters) - Nasdaq OMX Group Inc has been sued by an investor who claimed the exchange operator was negligent in handling orders for Facebook Inc shares following its initial public offering, causing losses for investors.


In addition, a different civil lawsuit was filed against Facebook, Mark Zuckerberg, IPO underwriters Morgan Stanley & Co and others alleging violations of securities laws.

Tue, 05/22/2012 - 22:33 | 2453756 Downtoolong
Downtoolong's picture

Everything I’m reading in the Mainstream Media about Facebook today seems like a big dodge to me. We’re now supposed to be convinced that this catastrophe (aka IPO  = I’m Pissed Off) was the result of something that went wrong in the last three days. God forbid we should be allowed to believe it was because the insiders knew the company was worthless to begin with and the whole thing was pure Disney style marketing and Wall Street orchestrated fraud from day one. Now begins the cover up. Divert, distract, fade, disguise, ignore, deceive, lie, and when all else fails, blame the janitor. Wall Street is 1% substance and 99% sales. That's their game to the end, and it guarantees their game will eventually end. 

Don’t be sold by these frauds and their paid media minions. You know the truth in your hearts and minds. If you had any guts you would cancel your Facebook account right now. It's the only solution you have. It's your only weaopon. I would do it, but, I never had a Facebook account to begin with.  Trust me, this will be a lot more effective protest against Wall Street and its extortionary business practices than standing on the curb in the rain in front of a bank building, waving flags, signs and shouting slogans. Worst case for those of you who can't survive the DT's of life without Facebook (poor bastards) you can always reinstate your account in a few days.

Stand up and do the simplest possible thing, something that really counts, or suffer your fate by their hands.

Tue, 05/22/2012 - 22:56 | 2453805 Common_Cents22
Common_Cents22's picture



Baraka could then camPAIN on FacePalm accounts either created or saved.

Tue, 05/22/2012 - 22:53 | 2453800 Theos
Theos's picture

Can someone explain why this is a big deal to anyone but HFTs? 


We all know the markets are broken, but they are broken becuase of their uptime, not their downtime. 

Tue, 05/22/2012 - 22:59 | 2453810 Common_Cents22
Common_Cents22's picture

Would you mind if private well connected companies set up toll boths on every street around your house and started charging?


HFT is a tax or toll on trades and has nothing to do with speculation and capitalism.   Even worse, latency advantages allow HFT to tease orders and manipulate markets.

Tue, 05/22/2012 - 23:34 | 2453855 Theos
Theos's picture

I understand that. How is quote failure for 17 seconds a big deal to anyone but HFT? Where is the cuttoff of HFT - when does it stop becoming a toll? 

Wed, 05/23/2012 - 02:38 | 2454099 Illustro
Illustro's picture

THIS reminds me how a DDoS attack works. You simply flood the system until it fails. DDoS is brilliant in its simplicity as there is no hacking or viruses or access required; just flood the system with incoming requests for data. 

Wed, 05/23/2012 - 05:14 | 2454195 q99x2
q99x2's picture

The biggest fallout from FB is likely be from the bribes that were paid with its shares. Politically that will not go over well.

Wed, 05/23/2012 - 05:47 | 2454212 TrainWreck1
TrainWreck1's picture

17 seconds could have been Z-bag consummating his marriage.

Wed, 05/23/2012 - 10:04 | 2454649 Bones265
Bones265's picture

Just when I thought I was out. They Pull me Back in!


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