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"Retroactive Market Conditions": Nasdaq Says Would Have Called Off FaceBook IPO If It Knew Then What It Knows Now
First of all, let's get one thing straight: if instead of about to breach a 20-handle, the Facebook stock price was in the $60, nobody would care about anything that happened in the past 3 days, everyone would be happy and delighted, and increasing the velocity of money with the comfort that some greater fool would be willing to pay even more for ridiculous overvalued ponzi, pardon, portfolio holdings. Alas, we are not there, and as a result, the fingerpointing phase has come and gone. Now come the lawsuits, because people, led to believe in huge short-term profits, are now faced to face with a grim sur-reality in which the tooth fairy was just exposed as the cookie monster. And the latest farcical development: Nasdaq finally pulling market conditions, but not just any market conditions - retroactive ones.
As the WSJ reports: "A senior Nasdaq Stock Market official told customers Tuesday afternoon that it would have pulled the plug on Facebook Inc.'s initial public offering had it known the full extent of the technical problems that plagued its systems. On a conference call with brokers after Tuesday's close, Eric Noll, head of transaction services, said the exchange "by no means would have gone forward" with the much-watched Facebook debut if it had known problems would disrupt a "normal trading day." "In retrospect, it was incorrect," Mr. Noll said of Nasdaq's interpretation of problems." At this point every plaintif's bar attorney eyes just lit up, because what Nasdaq just admitted was liability. And every single retail investor who has lost money, which would be everyone who has bought and held as the stock closed at a fresh all time (read 2.7 day) low, will now demand that had they known what the Nasdaq pretended not to know, but now knows, they would not have put that limit $43 buy order. In the meantime, the actual stock price of Facebook will flounder as the stock becomes a whipping boy if not for investors, then for attorneys everywhere.
More from the WSJ:
Nasdaq said it can't promise customers they will be compensated for losses due to its IPO system failures.
We don't ultimately know whether everyone will get a dollar on the dollar," Mr. Noll said, saying the ultimate payouts will depend on regulatory approval and sign-off from Nasdaq's own board.
The exchange operator has been in touch with Facebook since the IPO blunder last week, according to Mr. Noll, and those conversations were "ongoing," he told brokers on the conference call.
When asked why Nasdaq hadn't tested for the high levels of order cancellations that it said drove the technical problems with Facebook's IPO opening, Mr. Noll said on the conference call that exchange officials believed they had sought to address such potential issues.
We'll give the Nasdaq one thing though: unlike everyone else in this day and age, whose primary recourse is to scapegoat, and to deflect blame, Nasdaq refused to bash that one whipping boy for all things market structure (which Zero Hedge first warned about over 3 years ago): high frequency trading.
High-frequency trading firms, known for the heavy burden they place on exchange systems, played no role in Nasdaq's problems opening up Facebook's shares for trading Friday morning, Mr. Noll said on the conference call. Most such firms do their trading after stocks open on the broader U.S. markets, Mr. Noll told member firms, and there were no signs that any were active as Nasdaq struggled to match up buy and sell orders to form the opening trade in Facebook.
Sadly, something tells us that the final outcome of this debacle will be the end of the Nasdaq which will soon be BATS'ed out of existence, but not due to faulty algos originating on the NYSE or Sigma X, but because the firm will soon be sued to liquidation.
Which a world in which virtually no retail investors are left, is probably very much overdue.
* * *
Still why didn't Nasdaq, or Morgan Stanley, do pull a "market conditions" on Friday? Here is how we laid it out.
Some HFT firm will go out of business today
— zerohedge (@zerohedge) May 18, 2012
In retrospect, the current outcome will likely turn out even worse for investors' faith and sentiment in the farce known as the capital markets.
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How long before FB sues MS for irreparable harm to the company name after the failed IPO?
This is from the CNBS website:
“My best guess—and it’s just a guess at this point—is that losses similar to those claimed by that investor may total between $50 and $100 million,” said Rich Repetto, the well-known expert on trading and exchanges at Sandler O’Neill.
Repetto, along with many other traders with first-hand or second hand experience, are among those that believe this alert could have inadvertently caused Monday’s run on the stock. The share price is still below Monday’s low.
The irony is that “the likelihood of (the investor) getting full restitution is very unlikely,” Repetto says.
The reason: Nasdaq’s liability for technical issues is limited to a mere $3 million per month. The exchange itself is pushing regulators to allow it to pay out $10 million more in this particular high-profile case.
Link:
http://www.cnbc.com/id/47520037
WTF. It's like the entire market's rationally unexuberant & now the Greenspans of the world want us 2 go irrationally exuberant again.
What's a market?
I think it's where people meet 2 buy & sell goods & services 2 one another without getting incessantly ripped off. Oops.
See it's like this: this is the WS 'mea culpa' in exchange for the entire financial crisis, mortgage and securitization debacles, and generally running the country into the ground so that a bunch of guys could do hookers and blow for the next few years aboard their yachts floating on the Mediterranean. "Please blame us for this and make us look bad so that you all people can forget the big stuff we got away with. Let us have it for this one (which will amount to nothing)" It's like pleading guilty to a lesser charge and getting away with a suspended sentence.
".......so that a bunch of guys could do hookers and blow for the next few years aboard their yachts floating on the Mediterranean."
Ok, so what you're saying is that this is all going to a good criminal cause then.
Shit yeah. I want to make sure that I live in a country where winners get to do hookers and blow for life. Even if what they do hurts the country, it's worth it because it fulfills the pure free market wet dream: fooling all of the people all of time without even using any lube.
It's a beautiful phucking thing man when your illegal wet dreams come true. What a country.
Faace Boook 'ha been bery bery goood to me
Ya hit that one outta the turd world park.
+1
"Gona get me a shotgun and shoot all the (fill in the blanks) that I see"
My Gawd! If I'd only known that stawks could go down after I bought'em, I'd be hirin' me a herd o' liars. Makes ya wonder just who
got the good prices while Morgan Stanley was proppin' up the FB tape...
This is just like the idjuts that buy Windoze OS the minute they go on sale, expecting trouble-free operation -- it don't work that way on my planet! :>D
What's a WSJ and who cares what they have to say.
Nothing to do or see about this FB circus.
Maybe the public will now see what we all already know.
The Hedge Funds, the HFTs and Trading Desk at your local bank made a fortune gumming up the system.
Nothing but a new way to take away people's cash.
You guys will love this one:
http://www.newschannel5.com/story/18241221/man-loses-22000-in-new-polici...
I'm not surprised.
Well on the bright side, things aren't as bad as Japan with their 'Radioactive Market Conditions'.
So how is it the COMEX in not in the same trick bag after the MF debacle?
That's something we ALL want to know ...
I actually believe this is purposful...
.. they are pushing the market towards "Irrationally unexuberant"
creative destruction! Like Greece being purposfully being thrown under the bus, then Gov chaos, to politically assume Greece...
http://www.thecrimson.com/article/2012/5/1/ten-questions-kissinger/ Note HK's response in the 2nd to last paragraph...
Oh joy, here we go. The land of the free and the home of the eternal lawsuits. Can't wait, banksters litigating other banksters into oblivion.
SHORT NASDAQ NOW! YOU MOTHERFUCKING BITCHES!
I haven't ever made a recommendation here. However, for my debut recommendation, I am going to suggest shorting FB until it is at least down in the mid-teens.
Disclosure:
I do not have any trades in place on FB and am not contemplating any trades.
Nasdaq is going to be sued into liquidation, big time. Either they sue the HFT companies for screwing up their systems (if they can) or they bite the bullet and go out of business. Also could someone tell me why did Facebook wait until 11:06 am to start trading for the stock. I thought that many IPO's love to start at the start of business which is 9:30 am. I think they wanted it late so that the people who bought the stock wouldn't swamp the system with sell orders when the problems start and they start to realize the revenue and profit is two different things for the company.
I wonder what role the squid Goldman had in all this. i find it hard to believe this was all Morgan Stanley's fault
While we are at finger pointing and eye poking, weren't the technical issues a result of an avenging raid from a known NASDAQ competitor?
Exclusive!
Here is some forensic video of what actually happened...
http://www.youtube.com/watch?v=41lTZaHMTCw&feature=related
20/20 Bitches!
fail
Well, I tryed.
lol
It's bitchez, with a Z, around these parts.
Where are they gonna find enough new suckers to get this stock erect again?
http://www.babycenter.com/0_surprising-facts-about-birth-in-the-united-s...
Think of all the future revenue sources, uh I mean users.
I will say FB is way overvalued here but... They need to leverage their penetration and compete with Visa, PayPal, and JP Morgan/Wells/Citi/BoA and work on payments and online banking. That is where the money could be made. Fuck click through ads. What a waste of potential revenue this company is right now.
WTF. I thought FB was all about people connecting with other people and not connecting with their bank?
I'm just talking about making money.
GE used to be an industrial company.
Oh. So like FB could evolve into another giant faceless conglomerate disconnecting people from one another to make a buck. Makes sense.
Exactly.
I'm not saying it's right. I am saying that most financial firms would KILL for facebook type penetration and data to maximize the cross sell. If they are serious about maximizing shareholder value they would at least attempt to compete with Visa or PayPal.
People talk about not trusting Facebook. Is it any worse to trust Facebook with financial info than say JP Morgan? I would argue it isn't.
http://www.youtube.com/watch?v=YUhb0XII93I
The market penetration could be incredibly valuable.
Here's how they'll do it . . . and it's genius. Through their authentication program. That how you can sign into many other sites via FB now, without having to have lots of user IDs and passwords, just gotta remember FBs. Can do with Twitter and Linkin and others too. Users doing it all the time already, so they "trust" the FB authentication process of knowing who is on board and driving actions. Afterall, FB knows more about its user (for fraud purposes and user authentication or verification) than VISA or Mastercard or Safeway or any of those others that are merely a 16 digit number.
If they start to use a further improved authentication process for payments . . . and they have nearly 1 Billion users/customers . . . they could be a gigantic financial machine, payment service, supermarket - many things. This model, more than the advertising monetization, is what the believers in FB whisper about. And, people talk of FB as a product, a service, a communication vehicle, and a community center. Can't recall people speaking of BAC or JPM or VISA or NETFLIX or COMCAST or TARGET in similar terms.
Yes, privacy concerns and issues remain, but FB is further ahead on this than most.
CClarity, you hit the nail on the head.
wow.. Great insight! I concur with this idea as its real motive! +1
Half the users are under 25. Those that are over 25 only got there to a) Stalk old gfs/bfs b) Find an affair c) Family (least popular). Monetize that!
Actually, I'd be surprised if Facebook has half of the users they claim they do. I know a crapload of users who play games with multiple accounts. After all, you don't have to produce ID to sign up, just a user name and an email account.
Who knew the market was run by Captain Hindsight? My hero...jump to 1 minute in the video.
http://www.southparkstudios.com/clips/360430/captain-hindsight
"We're incompetent, but really sorry".
Gee I'm sure that makes Zuckerberg's suckers feel better about the situation.
Looks like Madoff is still running the joint...
They're not sorry.
Maybe Mr Zuckerberg will give some of the money back to his new shareholders. He seems like a nice guy.
If I knew then what I know now, I would have never let (H.R. 7837, 1913) go through either...
We really are at Peak Idiocy.
Not possible as long as the human population grows
Let's hope.
Unfortunately I think you are wrong on that peak call.
Let's examine the facts...
- Government appears to still be growing
Conclusion: We have yet to reach peak idiocy
This market makes garage sales look like Bloomingdale's.
Paper always reverts to its intrinsic value. Say what?????? Desperation breeds buffoons.
Me thinks someone doesn't want retail in the stock market anymore.
http://www.marketwatch.com/story/facebooks-zuckerberg-thiel-sell-shares-2012-05-22?link=MW_latest_news
+1
Exactly!
By law the brokers need to pay up to their clients. Then the brokerage needs to squeeze the exchange to get paid. This'll get interesting. Booyah...the lawyers get rich er .
Here the MSM is just noticing Faceplant stocks are at 31 bucks, like 2 days after the rout. So we know the KoolAid lasts 2 days, more or less.
that's still better than expected, though.
Sued to liquidation, bitchez!
"Sadly, something tells us that the final outcome of this debacle will be the end of the Nasdaq which will soon be BATS'ed out of existence"
~~~
Oh good... So does that mean that they'll just move the "Fast Money" show over to the nearest Scores Club?
rar. the IPO syndicate got ripped off so they go to the exchange and demand a refund!
Can one even say the phrase, "a sure thing that went south," in yiddish without using the word advokat?
This is pure comedy.
Shakespeare would have enjoyed this and put it to a play and Mozart would have done the music!
So because the stock went down instead of up people will demand their money back. Isn't that the risk of investing? The assumption that the exchange is running according to plan is a risk.
If that's the case, then Bernanke ought to be listed as a co-defendant...
Too many sellers = Technical Issues.
Actually, it seems the problem here was too many canceled buy orders.
Just goes to show; you can't tell a faceBOOK by it's cover.
So valuations mean nothing?
Happy ponzi ponzi, Wall Street scoundrels!!
Oh, so now there were other problems? How about the 17 full seconds of no quotes or trades for ANY U.S. stock from Nasdaq right before Facebook opens? Did someone at Nasdaq decide to reboot.. entire.. systems? Data doesn't lie:
http://www.nanex.net/aqck/3122.html
Skynet took over there; determined the square root of pie, the meaning of infinity, and that the insiders could sell FB at $41.50.
& then they divided by zero...
Now that all this is behind us, I wonder if the retail investor will finally come back to...oh wait.
CORZINED!
No doubt there is some sliver spoon trust fund baby out there who put down a $1 million dollar bet on Farcebook; but who also has another $10 million to spend on lawyers.
Don't you need an legitimate market to have a market failure?
This FB IPO is fascinating. Clearly they tried to sell the hype and failed. Clearly they tried to sell the hype and failed because retail is now the smart money. Bizarro world.
They didn't fail, the retail investor fell for it hook, line, and sinker.
This is your Captain speaking, abandon ship.
What ship?
"Technicians of spaceship earth, this is your captain speaking: your captain is dead."
When a slot machine wrongly pays a jackpot the casino tells the gambler to fuck off. Nasdaq should do the same.
I thought Nasdaq limited it's liability.
Apparently, it liabled its limit.
They should just cancel those trades and have a do-over. It was only a few hundred million transactions, right? I'm sure everyone kept their receipts.
Our firm had previously been in talks with FB about advertising.
Just trying to get someone on the phone was a pain in the ass and took weeks.
Decided we would pass on FB and spend the dollars elsewhere.
This was months ago.
Earlier today they called my cell. I let it ring. They left no message.
I wonder what they possible could have wanted?????
Entitlement mentality crybabies, pacified by a Fed-inspired perception of no risk. Go fukk yourselves.
The large financial institutions are total fuck ups. They get every advantage in the book, a shit ton of leverage, free money, absurd compensation, a captured government, the best lobbyists money can buy, and these dip shits are still going down the shit shoot, look at their fucking stock prices for christ sake. Fucking hilarious.
there is no shame or grace in these current thieves. I said the market will be propped up until Facebook gets its bagholders and they did and don't give a damn how they shit the bed doing it
+1 for using "shame" and "grace" in the context of Wall Street
not in a trillion years
I'm gonna laugh when FB becomes a penny stock. Might happen by Friday at this rate...
why not? 'bastions' such as jpm and bac trade up and down 2,3,4,5% everyday like penny stocks. why? because they are? nobody has any real idea what they earn. or lose. or anything. and if they lose, then fine, bailout, everybody else sold off, so i'll grab the btfd. so manipulated. these are huge corporations. where is capitalism?
The fact is Faceplant was a ridiculous investment, regardless of any initial trading problems on NASDAQ. The stock was always going to plunge once people wised-up to the preposterous over-valuation of a faddish 'social network' that produces nothing and has no viable long-term business model.
All these early investors who are now whining should just shut-the-fuck up and eat their loses - a just reward for rampant stupidity.
This guy is miffed that he bought FB
http://farm8.staticflickr.com/7235/7248085914_5d84d71105_z.jpg
He'll be okay. Nasdaq will return his money as a show of good faith the overseas investors.
Bullish gold.
I don't know about penny- look at AOL's P/E, I thought everyone was off dialup, yet 85x
(all useless tech stocks)
Zuckers: There's (226) born every minute! (Hat Tip PT Barnum, back when we weren't living in a rat maze).
Hmmmm maybe it wasn't such a good idea for the NASDAQ to fuck with the Bats IPO. Karma can be a bitch.
Pure popcorn. It's the added butter and salt thats dragging FB down.
OK you caught me in a lie so I'm recalling that lie. Trust me on this, I know what I'm doing.
Fleecebook.
FACEPLANT!!!
zUCKERFUCK is having his bad Karma come back into the room now. I guess he is a "dumb fuck" along with his clueless users. Fuckbook will be an also ran, had been within a year as the ravages of the Greatest depression take their toll on real companies advertising budgets.
FACEPLANT!!!
zUCKERFUCK is having his bad Karma come back into the room now. I guess he is a "dumb fuck" along with his clueless users. Fuckbook will be an also ran, had been within a year as the ravages of the Greatest depression take their toll on real companies advertising budgets.
FB should have used BATS.
Hehe that is funny!! +1
If an IPO falls on it's Facebook on Wall Street, does any body hear it ? Anybody ? Is anybody out there ? Full blown Mexican retail SARC !
Now all your money belongs to us, buitchez ! Thank you very much, Goldman Sachs, and Friends.
What do technical problems have to do with no one wanting the buy the stock? They are trying to blame exhanges for crappy stock price. God forbid some one actually acknowledge the stock is a pooch.
So did you buy Facebook at $39.0004 or $39.00055?
Go ahead, ask your algo. And get a time and tape on that.
All you need to know about Facebook is how do they actually make money. Answer: Ads and game upgrades (which may only be commissions), I haven't read their SEC stuff. But just knowing that was enough to keep me away. Is FB really worth more than McDonalds (a cash machine if there ever was one). C'mon!
hopefully -nasdaq will keep outsourcing their technology resources to india because it is CHEAP. and they will keep testing their 'systems' to be fully capable of handling any order flow. nice job india. worth every penny we saved.
oh.. i forgot. and thanks nasdaq for the h1b visas also - because if americans can't outsource, might as well bring an indian here and do it cheaper.
"First of all, let's get one thing straight: if instead of about to breach a 20-handle, the Facebook stock price was in the $60, nobody would care about anything that happened in the past 3 days, everyone would be happy and delighted, and increasing the velocity of money with the comfort that some greater fool would be willing to pay even more for ridiculous overvalued ponzi, pardon, portfolio holdings." - ZH
This one sentence should qualify this article for a Pulitzer Prize... and this sentence is goddam right on the money. Nobody would give a damn about any such "shenanigans" if the stock price of FB had soared.
Ronnie Lane - Ooh la la (live @ BBC 1974)
http://www.youtube.com/watch?v=24jcIQiP01A
.
but, can you deal with this?
a moment of truth , in and out, of time
and the face iz " book " ////
.
Ooh La La - The Faces
http://www.youtube.com/watch?v=769Oueux4nI&feature=related
Have they (Nasdaq) heard about the testing???
http://www.youtube.com/watch?v=LhjHBV20ZV4&feature=related
Ooh La La - The Faces (Without A Paddle Soundtrack)
Lyrics: r. lane
Poor old Granddad, I laughed at all his words
I thought he was a bitter man
he spoke of women's ways
he said they'll trap you then they use you
before you even know
for love is blind and you're far to kind
don't ever let it show
oh I wish that I knew what I know now
when I was younger
I wish that I knew what I know now
when I was stronger
the can-can such a pretty show
will steal your heart away
but backstage back on earth again
the dressing rooms are gray
they come on strong and it ain't too long
for they make you feel a man
but love is blind and you soon will find
you're just a boy again
chorus
when you want her lips, you get her cheek
makes you wonder where you are
if you want some more then she's fast asleep
leaves you twinkling with the stars
poor young grandson there's nothing I can say
you'll have to learn, just like me
and that's the hardest way
ooh la la
ooh la la, la la, yeah
I wish that I knew what I know now
when I was younger
I wish that I knew what I know now
when I was stronger
.
Ron Wood - Ooh La La - 2004
http://www.youtube.com/watch?v=k70d1Y-KaGA&feature=related
the IPO should be busted and all trades cancelled. the money should be returned to the buyers.
"You do not understand American jokes." is what Edison told Tesla, when Tesla asked for the $50,000, Edison promised him for improving efficiency of the hopelessly inefficient DC generators.
I guess, the retail investors do not understand American jokes: "Take the money and RUN".
Confessions of a Tooth Fairy
http://www.youtube.com/watch?v=uOas5EKQ3IA
Never say you're sorry, unless you are in Canada.
Why call Captain Hindsight when superior retrospect can be had from Princess Hindsight!
Face(book) it, anyone who gives their money over to a 28 year old kid so he can exercise complete control over a $100 bn enterprise deserves to lose it.
Zuckerbag will work tirelessly to make this up to all who placed their trust in his company*
*comments in this post subject to retraction