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Former SEC Lawyer: Expect More Facebook Lawsuits

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    Former SEC Attorney Ron Geffner on the Nasdaq glitches during the Facebook IPO.

  • Duration 3:58
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FaceBook fall out.

Our Charlie Gasparino broke the news yesterday the NASDAQ expected to announce a compensation package for -- that lost money from -- -- IPO.

Joining me now with his take former SEC lawyer Ron gap there of status and Goldberg.

Ron you know -- FaceBook investors -- state to the lost a hundred million dollars or more 200 million on the glitches and yet the settlement is said to be somewhere between thirteen and thirty million dollars.

Is -- that affect allowed to do that.

All statutorily pursuant to contract nasdaq's limits the liability of three million dollars per month to -- that trading occurred on that would be the limitation.

They have an extra ten point seven they've made in the phantom holdings.

IPO so they're trying to go beyond that and looking at regulators for approval to do that.

I mean I imagine any business would love that idea of a three million dollar monthly cap on damages when you screw up to the tune of a hundred.

Million dollars now part of this -- also is said to be in the form of eight.

We'll give -- -- discount on future trading but isn't that kind of like a restaurant that gives you food poisoning offering you coupons for future free meal.

It's a lovely comparison that would be exactly what you're saying.

Other changes are concerned that that would not be fair anything that would increase order flow to NASDAQ in contravention of the other changes opportunities.

Isn't -- -- dealing.

Oh my gosh maybe the NASDAQ should have to instead give -- credit to trade anywhere I walked.

And rather than only trading on NASDAQ that they do something like that.

That's certainly not how works the other conservator balancing out -- -- liability.

Against their viability when I say viability.

How horrible would -- be if any of -- changes had to file for bankruptcy.

It would affect more people than you can imagine that are currently being affected even by the FaceBook botch.

That we already had a raft of class action lawsuits and only see even more filed against NASDAQ sadly although -- -- to speak for my brother and and there are some good class action lawyers.

You always expect that other people may come out of the woodwork.

-- if not against these changes possibly against the brokers -- there -- wraps.

-- do we think that the IPO glitch is actually hurt Facebook's image as an investment and and continue to hurt for days or -- a just a one day anomaly.

Well that's a subject of question I presume it was a one day anomaly.

And really really affects the reputation of NASDAQ cannot FaceBook and the other options people were kicking -- of NASDAQ and found something differently.

Should they have halted trading FaceBook should I have and I would've argued that they should not have because that would cause the concern.

-- the viability of FaceBook and the information investors relying upon.

As opposed to the quality of the technological changes -- Failures -- we're going on -- announced that do we know yet what part of the trade NASDAQ blue it's because so many people wanted to buy the stock -- because silly -- wanted to sell the stock.

It's not clear to me at this point and one of the things that is going on -- regulators looking into.

What is a liability to NASDAQ separate and from the damages investors might have suffered.

And one would might expect depending on how it's been handled.

The SEC may Levy a fine against NASDAQ but that being said -- technological.

Glitch isn't necessarily -- regulatory violation.

Now if that affected to -- -- of NASDAQ and processed every order seamlessly.

Might this FaceBook price have done better because more demand what is -- -- for the stock.

It's anybody's guess I mean obviously we're now hearing -- in the morning quarterbacks saying one opinion vs the other -- the valuation of FaceBook.

There seems to be as many people that -- positive and supportive the investment as a or negative.

So I couldn't tell you on that's it makes a trait that -- NASDAQ CEO Bob Wright felt does he survive this thing do we have to chop up his head to feel better.

I would think somebody's got -- This is the bigger one the biggest IPO's biggest which is we've seen on an exchange.

Somebody's -- -- -- usually.

The president's had rules on so -- -- public debt and you're you're I don't think right here a man with virtually have seen a lot of times yeah that's stuff rolls downhill so there's there's movies they've got including -- of the top guys all right well thank you very much of me with a front after a -- job trade hate cats -- I -- is my.

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