Facebook Investors De-Friend NASDAQ
Since its inception in 1971, the NASDAQ has distinguished itself from the much older, world-renowned New York Stock Exchange (NYSE) by promoting itself as the more modern, technology-specialist exchange preferred by high profile, high-tech companies such as Apple and Google. Based on this reputation, it was the exchange chosen for the widely anticipated $16 billion Facebook initial public offering (IPO) on May 18.
Unfortunately, it didn’t go as planned. The high-tech specialists had technical problems…
In an industry where confirmations can be processed within seconds after an order has been executed, the volume overwhelmed NASDAQ’s systems forcing a half-hour delay in opening trading and leaving investor companies, individuals and brokers without results for orders. With over 500 million shares changing hands, this is an exorbitantly expensive flop. The company traditionally has a $3 million cap for recovering losses due to technical problems but this plan involves a mix of cash ($13.7 million) and trading discounts (credit for NASDAQ trading fees) up to a total of $40 million.
The moral of the story? Mistakes happen and when they do, they can be costly in more ways than one. Assuming you can cover the financial damages, in some cases the bigger concern is recouping your reputation. Whether you’re an individual professional, a small business or a huge company, having a plan in place to deal with unanticipated problems will speed recovery and reign in financial damages. BizInsure’s goal is to help you be an educated insurance consumer and eliminate redundancies or gaps in your coverage. If you have any questions about your insurance needs, we’re here to help.
BizInsure Guest Blogger: Tanya Weliky
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