Nasdaq: Hindsight Says to Delay IPO --- Regulators Probe Exchange, Banks
A senior Nasdaq Stock Market executive told customers that the exchange would have put the brakes on Facebook Inc.'s initial public offering had it known the extent of the technical problems that would plague its systems and disrupt the eagerly anticipated listing.</br></br>Nasdaq's comments came as regulators moved to review the exchange's handling of the listing. They also are examining underwriters Morgan Stanley and Goldman Sachs Group Inc. over reductions in Facebook's earnings estimates during the IPO roadshow.</br></br>On a conference call with brokers after Tuesday's close, Eric Noll, Nasdaq OMX Group Inc.'s head of transaction services, said the exchange "by no means would have gone forward with a print" had Nasdaq believed there would be problems "in continuous trading." A "print" is industry parlance for the share price that results from the match-up of orders before trading starts, and is the price at which shares start trading on the open market.</br></br>Mr. Noll suggested Nasdaq had underestimated the technical problems. He said the exchange's early interpretation of problems that delayed trading in Facebook shares by 30 minutes was incorrect. "We thought we had a fix," he said on the call.</br></br>In comments to The Wall Street Journal following the call, Mr. Noll said, "If we had known that our solution was inadequate, we would have fixed the issue with the right solution before going forward."