Hedge fund manager speaks out about Facebook’s IPO fiasco
What happens when an IPO that is expected to sell for as high as $70 per share ends up selling for only about half of that a few days after the initial offering?
What happens when an IPO that is expected to sell for as high as $70 per share ends up selling for only about half of that a few days after the initial offering? The Facebook IPO was one of the most anticipated IPO's in recent history, yet it also turned out to be one of the most disappointing for many investors.
Many people on Wall Street even speculated that the IPO would lead to perhaps another mini .com-tech IPO explosion.
Businessinsider.com has managed to reach out to a hedge fund manager that experienced first hand the immense loss that coincided with the NASDAQ-Facebook IPO fiasco.
In the hedge fund manager's interview with businessinsider.com, he states that NASDAQ knew about the computer issues, yet they refused to pull the plug on the Facebook IPO.
“They knew this thing was f***ked up and they just went in and did it. This isn't a computer f***k-up. The computers told them it wasn't working,” the manager was quoted in his interview transcript.
The manager also shed some additional insight into the technical machineries that runs NASDAQ by saying that “rule 4626…limits their (NASDAQ's) liability on the system crashes.” “They'll say to the member firms: you've agreed to this limitation.”
NASDAQ's rule 4626, according to the manager, essentially eliminates some of the responsibilities that NASDAQ has on their own computer system, and so it sounds as if NASDAQ just doesn't care about the investors who just lost millions. Forget the average Joe's $5,000 investment into the Facebook IPO, because he probably lost a little less than half of his investment. However, firms that poured millions into the IPO must be going crazy.
The loss of millions by investors will no doubt lead to class action lawsuits, but that remains to be seen if NASDAQ will take full responsibilities for the debacle or not.
"This should have been a blockbuster. This should have traded to $60 or $70. This should have launched a wave of tech IPOs,” the bitter hedge fund manager concluded in his interview.