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Facebook IPO Investors Confused By Technical Error

AP  |  By Posted: Updated: 05/21/2012 12:06 am

NEW YORK (AP) — Some investors who thought they had bought Facebook shares at the opening of trading were left without knowing for hours whether they had received the shares.

The Securities and Exchange Commission is looking into the glitches in the trading of Facebook's initial public offering around the time of its scheduled debut Friday on the Nasdaq Stock Market.

The glitches caused traders problems changing and canceling their orders. Nasdaq said around noon that it was "investigating an issue in delivering trade execution messages" for Facebook stock.

The SEC will review the incident with Nasdaq "to determine its cause and steps that will be taken to address it," agency spokesman John Nester said.

Technical glitches at the Nasdaq Stock Market had already delayed the trading of Facebook's stock by half an hour. The stock, which was expected to start trading at 11 am, opened at 11:32 a.m. at $42.05 and ended the day at $38.23.

Joseph Saluzzi, co-founder of broker Themis Trading, said it's understandable that a delay at the opening might occur with a large IPO like Facebook's. "The problem is when people don't know if they had bought or sold a certain number of shares and that affects how people manage risk," Saluzzi said.

Brokers who might have wanted to sell after the IPO was priced weren't sure if they had received a piece of the highly-anticipated offering from the online social networking phenomenon.

Nasdaq didn't respond to requests for comment, but the exchange posted a message on one of its websites telling investors who had problems buying or selling Facebook stock between 11:11 and 11:30 a.m. to call Nasdaq before 5 p.m. with their order information.

"Our intention is to reach resolution of those trades today through an offline matching process," Nasdaq said in a comment posted on its website. "If at the end of that process, a firm continues to have questions or concerns, the firm needs to submit a formal accommodation request to us through the normal channels."

In March, there was a far worse technical foul-up at the intended IPO of BATS Global Markets Inc., a Kansas-based company that competes with Nasdaq Stock Market and the New York Stock Exchange in offering stock trading services.

BATS tried to list its stock on its own trading systems, but a series of snafus prevented the stock from ever opening for trading. The company wound up canceling its IPO and its CEO, Joe Ratterman, issued a public apology.

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AP Business Writer Marcy Gordon contributed to this story from Washington,

Also on HuffPost:

Have a look through the gallery to read about the biggest tech IPOs of the last decade (minus Facebook) and how they fared.
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  • Google: $1.67 Billion

    Google <a href="http://www.nytimes.com/2004/08/19/business/weak-demand-leads-google-to-lower-its-sights.html?pagewanted=all&src=pm" target="_hplink">raised $1.67 billion</a> in its August 2004 IPO, valuing the company at $23 billion. As of May 15, 2012, Google <a href="http://www.dailyfinance.com/quote/nasdaq/google/goog" target="_hplink">was worth $199.2 billion</a>.

  • Yandex: $1.3 Billion

    The Russian search engine and web company <a href="http://www.huffingtonpost.com/2011/05/24/yandex-ipo-russia-search-engine-linkedin_n_866226.html" target="_hplink">raised $1.3 billion went it went public</a> in May 2011, giving it a valuation of around $8 billion. As of May 15, 2012, it had <a href="http://www.dailyfinance.com/quote/nasdaq/yandex-nv/yndx" target="_hplink">a market capitalization of $37.5 billion</a>.

  • Shanda Games Ltd.: $1.04 Billion

    Shanda Games, a Chinese online gaming company, raised $1.04 billion when it went public in Sept. 2009. That month, it had a market capitalization of $976.95 million, <a href="http://ycharts.com/companies/GAME/price#series=type:company,id:GAME,calc:price,,id:GAME,type:company,calc:market_cap&zoom=&startDate=9/25/2009&endDate=11/30/2011&format=real&recessions=false" target="_hplink">according to data from YCharts</a>. As of May 15, 2012, the company <a href="http://www.dailyfinance.com/quote/nasdaq/shanda-games-limited/game" target="_hplink">had a market capitalization of $1.3 billion</a>.

  • Zynga: $1 Billion

    Social gaming company Zynga raised $1 billion in its IPO in December, 2011, then the biggest web-related IPO since Google, <a href="http://www.huffingtonpost.com/2011/12/16/znga-ipo-nasdaq_n_1153518.html?ref=technology" target="_hplink">according to the Associated Press</a>. Zynga had a valuation of $7 billion before it began trading on the Nasdaq on December 16. As of May 15, 2012, the company <a href="https://www.google.com/finance?client=ob&q=NASDAQ:ZNGA" target="_hplink">had a market capitalization of $6.31 billion</a>.

  • Giant Interactive Group Inc.: $887 million

    Giant Interactive Group, a Chinese online gaming company, raised $887 million when it went public in October 2007. In December of that year, the company had a market capitalization of $3.358 billion, <a href="http://ycharts.com/companies/GA/price#series=type:company,id:GA,calc:price,,id:GA,type:company,calc:market_cap&zoom=10&startDate=&endDate=&format=real&recessions=false" target="_hplink">according to data from YCharts</a>. As of May 15, 2012, the company <a href="http://www.dailyfinance.com/quote/nyse/giant-interactive-group/ga" target="_hplink">was valued at $1.2 billion</a>.

  • RenRen: $743 Million

    RenRen, the Chinese social networking site, raised $743 million in its IPO in May 2011, <a href="http://www.reuters.com/article/2011/05/04/us-renren-ipo-idUSTRE7433HI20110504" target="_hplink">according to Reuters</a>. At the end of its first day of trading, the company had a market value of $7.4 billion. As of May 15, 2012, RenRen's <a href="http://finance.yahoo.com/q?s=RENN" target="_hplink">market capitalization stood at $2.3 billion</a>.

  • Groupon: $700 Million

    The daily deals site <a href="http://www.huffingtonpost.com/2011/11/04/groupon-ipo-biggest-since-google_n_1075374.html" target="_hplink">raised $700 million in its IPO</a> in November 2011, valuing the company at nearly $13 billion. As of May 15, 2012, Groupon's value was $7.85 billion.

  • Vonage: $531 million

    Vonage, the VoIP company, <a href="http://www.cnbc.com/id/46209095/The_10_Biggest_Internet_IPOs?slide=6" target="_hplink">raised $531 million when it went public</a> in May 2006, CNBC reports. The next month, it had a market capitalization of $1.338 billion, <a href="http://ycharts.com/companies/VG/price#series=type:company,id:VG,calc:price,,id:VG,type:company,calc:market_cap&zoom=&startDate=5/24/2006&endDate=5/16/2012&format=real&recessions=false" target="_hplink">according to data from YCharts</a>. As of May 16, 2012, Vonage <a href="http://www.dailyfinance.com/quote/nyse/vonage-holdings-corp/vg" target="_hplink">had a value of $387.1 million</a>.

  • Orbitz Worldwide Inc.: $510 Million

    Orbitz, the online travel company, raised $510 million when it went public in July 2007. As of May 15, 2012, the company <a href="https://www.google.com/finance?client=ob&q=NYSE:OWW" target="_hplink">had a market capitalization of $393.05 million</a>.

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Filed by Catharine Smith  |