Nasdaq OMX Group Inc has reached out to at least one brokerage that lost money due to Facebook's botched initial public offering on the exchange, saying it will make an announcement on Wednesday, a person at the brokerage firm said on Tuesday.
Nasdaq is expected to release details of a plan to make up some losses sustained by banks and trading firms, which collectively have been estimated above US$100 million, in a filing with the US Securities and Exchange Commission, according to the Wall Street Journal, citing unnamed sources.
Nasdaq declined to comment on Tuesday.
Facebook shares have fallen 32 percent since the IPO when technical glitches resulted in a 30-minute delay of the IPO, unconfirmed trades and losses by market makers and retail investors.
Nasdaq's plan to pay back brokers has been slowed by regulatory questions centered on exchange's ability to compensate customers, the WSJ reported, citing people familiar with the matter.
Nasdaq's liabilities for a trading glitch are limited through regulation and a contract with its customers to $3 million per month. The exchange has applied to the SEC to increase the amount to $13.7 million to include a gain of $10.7 million it made from the Facebook IPO through the sale of so-called "phantom shares" it was left holding in the IPO.
Meanwhile prominent Silicon Valley investor Paul Graham is warning the startups he fosters to ratchet down their fundraising expectations and conserve cash – and he blames Facebook.
"If you haven't raised money yet, lower your expectations for fundraising," he wrote Tuesday in an email to his startups, a copy of which was obtained by Reuters. "If you've raised a lot, don't spend it."
Facebook's poor performance since its initial public offering last month has many investors wondering whether startups are truly worth the high valuations some had been willing to pay in recent months.
Graham opened the letter by describing a recent dinner with an investor who said Facebook's decline would hurt valuations for early-stage startups. "But no one knows yet how much," Graham wrote. "Possibly only a little. Possibly a lot, if it becomes a vicious circle."
Graham cofounded Y Combinator, an organization that supports and funds startups and has backed high profile companies such as online home-rental business Airbnb.
A separate follow-up email sent to the startups by Geoff Ralston, also a partner at Y Combinator and the creator of RocketMail, warned of a potential global crisis should Spain require a bailout.
"It could get ugly and stay ugly for some time, and I believe it very unlikely that this won't impact startup funding," Ralston wrote.
In another development Facebook Inc is letting marketers place ads specifically in mobile versions of its social network service, addressing a key concern about broadening its appeal as smartphones and mobile devices become more popular.
The company, whose revenue growth has slowed in recent months, is also letting advertisers direct ads into users' news feeds as of Tuesday.
"We want to make it easier for advertisers to get the distribution they want," said Facebook spokeswoman Annie Ta.
Previously advertisers could buy a broad category of "sponsored stories" advertisements that would run on the website, but Facebook controlled whether the ads appeared on mobile devices or in users news feeds.