Companies in the early stages of going public are raising questions about whether they want to list with Nasdaq, The Post has learned.
The questions, coming two weeks after Bob Greifeld’s exchange botched the largest, most anticipated initial public offering in a generation – Facebook’s $16 billion coming-out party – are the first indication that Nasdaq’s headaches over the snafu are likely to linger.
“There’s no question, this Facebook situation has put on the table the question of Nasdaq’s market structure and its market quality,” one exchange expert told The Post.
The expert, who spoke on the condition of anonymity, cautioned that it was too early to conclude there would be permanent scarring to Nasdaq’s reputation, but that there was, without a doubt, some doubt in the minds of executives of prospective publicly listed companies.
Even the slightest hint of doubt is bad news for Greifeld, the Nasdaq CEO who is hoping to quickly put the Facebook fiasco behind him.
The Facebook IPO on May 18 had to be delayed roughly 30 minutes due to system problems, and some investors on Wall Street and Main Street had to wait days before they found out what price they actually bought the shares at.
Market-making units at firms such as Citadel, UBS, Citigroup, Knight Capital and others argue they are owed as much as $50 million due to glitches. Lead Facebook underwriter Morgan Stanley says it’s out about $10 million. Nasdaq may be on the hook for as much as $180 million, sources said.
The amounts owed to these firms may seem small – but the repercussions may be large. Companies aiming to go public often ask these market makers their opinions on the benefits and shortcomings of listing with the Nasdaq or the New York Stock Exchange, sources said.
These market makers are usually agnostic and voice no preference – but that is likely to change, the expert said.