Nasdaq Chief Executive Robert Greifeld blamed the technical issues that affected Facebook’s initial public offering on “arrogance” and “overconfidence” while speaking at a conference of corporate directors at Stanford University’s Law School Sunday.
The Wall Street Journal reported that Greifeld said Nasdaq had tested its systems extensively before the May 18 IPO, simulating higher trading volumes than those that actually occurred, but the exchange was unprepared for the high numbers of canceled orders in the hours leading up to the launch of the IPO.
Saying that Nasdaq’s ordering system had successfully handled 480 IPOs in the prior five years, Greifeld added, as reported by the Journal:
Testing didn’t account for the increasing volume at which cancellations can come in. There was not enough of a check and balance. We did not have enough business judgment in the process. If we knew it would take to 1:50 (p.m.) to get the allocations out, we might have had a different (outcome).
Nasdaq has been catching flak from all directions since the bungled IPO, including an investigation of its relationship with the Financial Industry Regulatory Authority and being blamed by Facebook and its underwriters in their defense strategy to combat IPO-related lawsuits.
Readers: Do you think Nasdaq should shoulder the brunt of the blame for the issues that plagued Facebook’s IPO on its debut day?