UBS AG (UBSN), Switzerland’s largest bank, said its loss on shares of Facebook Inc. (FB:US) isn’t material and declined to provide a figure after CNBC reported that the cost may be as much as $350 million.
The bank was left holding a larger Facebook stake than 1 million shares it meant to buy after repeatedly entering an order that wasn’t immediately confirmed, CNBC said, citing unidentified people. UBS bought the stock after Facebook’s $38- a-share offering, tried to find a buyer at $35 and sold some shares for less than $30 apiece, CNBC said.
Nasdaq OMX Group Inc.’s (NDAQ:US) computer systems used to establish the opening price for Facebook in the initial public offering were overwhelmed May 18 by order cancellations and updates for the IPO. Shares of Facebook, operator of the world’s largest social network, plunged in the days after its IPO, closing at $26.31 yesterday.
“Given the size of our U.S. equities business and our role as a major market maker, UBS was affected by these issues, as we believe other market participants may have been,” said Torie Von Alt, a spokeswoman for Zurich-based UBS. “We are continuing to consider avenues to recover our losses in this matter, but have not yet taken legal action.”
Joe Christinat, a spokesman for Nasdaq, declined to comment on the CNBC report.
Dow Jones Newswires reported May 25 that UBS lost about $30 million and Citigroup Inc. (C:US) about $20 million from servicing retail customers through their wholesaling businesses. Citadel LLC, the Chicago-based investment firm run by Ken Griffin, lost as much as $35 million on Facebook in its market-making unit, a person with knowledge of the firm said last month.
Nasdaq, the second-biggest U.S. stock exchange operator, said this week it earmarked $40 million to compensate brokers whose orders were mishandled in Facebook’s IPO. The plan would include $13.7 million in cash, with the remaining sum credited through reduced trading costs for members who suffered losses.
To contact the reporter on this story: Laura Marcinek in New York at firstname.lastname@example.org
To contact the editor responsible for this story: David Scheer at email@example.com