InfoAnda - Analysis: Regulator seen conflicted in Nasdaq's Facebook mess |

Pakistanis angry over detentions in Times Sq. case
Monday, May 24, 2010
ISLAMABAD – Relatives of three men detained by Pakistan for alleged links to the suspect in the attempted Times Square bombing say the men are innocent.
They

Taiwan denies boycotting Australian film festival
Thursday, August 6, 2009

AFP - Thursday, August 6TAIPEI (AFP) - - Taiwan's Beijing-friendly government on Wednesday denied boycotting an Australian film festival amid a row over the e

Merkel's support dips, regional ally resigns International
Thursday, September 3, 2009

By Sarah Marsh and Noah Barkin

BERLIN (Reuters) - Chancellor Angela Merkel suffered a double blow on Thursday as a senior party ally in east German

Minister seeks closure of anti-Berlusconi websites
Wednesday, December 16, 2009
ROME (AFP) - – The Italian government moved Tuesday to close down Internet sites encouraging further violence against Prime Minister Silvio Berlusconi, who

Asian markets mixed after Wall Street rally
Wednesday, March 18, 2009

By ELAINE KURTENBACH,AP Business Writer AP - Wednesday, March 18SHANGHAI - Asia's stock market rally seemed to be running out of steam Wednesday, despite an

Pakistan close to nabbing British boy's kidnappers | 8 March 2010
U.N. watchdog sees nuclear states doubling: report | International | | 15 May 2009
Police: Thai anti-gov't protest swells to 100,000 | 8 April 2009

Notebook sales surpass PCs for first time in US - Yahoo! Singapore News | 29 October 2008

Forum Views () Forum Replies ()

Read more with google mobile : Analysis: Regulator seen conflicted in Nasdaq's Facebook mess |

Edition: U.S. Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom Home Business Business Home Economy Technology Media Small Business Legal Deals Earnings Social Pulse Business Video The Freeland File Markets Markets Home U.S. Markets European Markets Asian Markets Global Market Data Indices M&A Stocks Bonds Currencies Commodities Futures Funds peHUB World World Home U.S. Brazil China Euro Zone Japan Mexico Russia India Insight World Video Reuters Investigates Decoder Politics Politics Home Election 2012 Campaign Polling Tales from the Trail Political Punchlines Supreme Court Politics Video Tech Technology Home MediaFile Science Tech Video Tech Tonic Social Pulse Opinion Opinion Home Chrystia Freeland John Lloyd Felix Salmon Jack Shafer David Rohde Bernd Debusmann Nader Mousavizadeh Lucy P. Marcus David Cay Johnston Bethany McLean Edward Hadas Hugo Dixon Ian Bremmer Lawrence Summers Susan Glasser The Great Debate Steven Brill Jack & Suzy Welch Frederick Kempe Christopher Papagianis Breakingviews Equities Credit Private Equity M&A Macro & Markets Politics Breakingviews Video Money Money Home Tax Break Lipper Awards 2012 Global Investing MuniLand Unstructured Finance Linda Stern Mark Miller John Wasik James Saft Analyst Research Alerts Watchlist Portfolio Stock Screener Fund Screener Personal Finance Video Money Clip Investing 201 Life Health Sports Arts Faithworld Business Traveler Entertainment Oddly Enough Lifestyle Video Pictures Pictures Home Reuters Photographers Full Focus Video Reuters TV Reuters News Article Comments (0) Counterparties: Today's Best Links Yes, executive pay is still rising Despite protests from shareholders -- and despite the economy -- executive pay is once again rising, the New York Times reports. Read more at Counterparties Homeowner aid program helps big banks Facebook and the law of diminishing returns Get Counterparties delivered to your inbox! Follow Reuters Facebook Twitter RSS YouTube Read Europe vows closer union at G20 summit | 1:46am EDT Spain's debt problems keep markets on edge 3:42am EDT Microsoft tackles iPad with Surface tablet 12:46am EDT Greek conservatives poised to clinch coalition deal | 3:27am EDT Romney says U.S. can "learn a lot" from Wisconsin governor 18 Jun 2012 Discussed 162 Most say Bush to blame for weak U.S. economy, poll finds 158 U.S. deserter in Sweden steps forward after 28 years 121 Joy and anger as Obama relaxes deportation rules Watched Protest over G20 priorities Mon, Jun 18 2012 Kate mucks in with childrens charity in countryside Sun, Jun 17 2012 Saudi royals mourn the death of Crown Prince Sun, Jun 17 2012 Pictures Reuters Photojournalism Our day's top images, in-depth photo essays and offbeat slices of life. See the best of Reuters photography. See more The Afghan front On the frontlines of the war in Afghhanistan. Slideshow The Presidential diet President Obama eating things. Slideshow Analysis: Regulator seen conflicted in Nasdaq's Facebook mess Tweet Share this Email Print Related News U.S. SEC chief offers regulatory guide to JPMorgan Mon, Jun 18 2012 Facebook sketches out IPO-mess defense; CTO departs Fri, Jun 15 2012 Facebook IPO mishandling hurt investor confidence: TD Ameritrade Thu, Jun 7 2012 Nasdaq's $40 million offer for Facebook losses draws criticism Wed, Jun 6 2012 Nasdaq to make Facebook compensation announcement Tue, Jun 5 2012 Analysis & Opinion Wall Street’s preference for low-priced stocks Jamie Dimon should come out swinging in Senate Related Topics Tech » Media » A man walks past a sign welcoming Facebook to the NASDAQ Marketsite in New York May 18, 2012. Credit: Reuters/Brendan McDermid By Suzanne Barlyn NEW YORK | Tue Jun 19, 2012 1:25am EDT NEW YORK (Reuters) - It is not every day that a company bungles something so badly that it has to turn to a regulator for help to clean up its mess. But that is what the Nasdaq stock market has done with the Financial Industry Regulatory Authority following its blunders in Facebook's $16 billion initial public offering. The move is causing raised eyebrows because of the long and intertwined relationship between the exchange and Wall Street's industry-funded regulator. Market makers say Nasdaq OMX Group Inc owes them at least $115 million and probably much more because of costly delays in processing orders when Facebook Inc made its debut on the exchange on May 18. Nasdaq has only offered $40 million in compensation for the losses, and most of that is in rebates on trading rather than in cash. Nasdaq, which says software glitches caused the delays, has asked FINRA to review the client transactions and claims. But some industry lawyers and compliance experts on Wall Street disapprove. Conflicts of interest are inevitable and could lead to questions of fairness, say observers and people familiar with both entities. For its part, FINRA sees the review and subsequent report as a "natural extension of the services we provide to Nasdaq under our regulatory agreement," spokeswoman Nancy Condon said in response to Reuters' questions about possible conflicts. "We make decisions every day that could have an impact on Nasdaq." A Nasdaq spokesman declined to comment. FINRA's involvement in the process is "a mistake," said a person familiar with the regulator's operations. Despite a longstanding reputation for integrity, Richard Ketchum, the Wall Street watchdog's chairman and chief executive officer, "should have said no" to Nasdaq's request for FINRA's services, the source said, because the relationship is "heavily conflicted." Among those conflicts that experts cited: The exchange pays FINRA fees to be regulated. FINRA's role as a regulator includes monitoring the exchange's trading activity and providing surveillance for insider trading - services that are remnants from when Nasdaq was owned by FINRA's predecessor, the National Association of Securities Dealers, or NASD. In 2000, Nasdaq members voted to spin off the exchange after a widespread and historic price-fixing scandal that led to industry reforms. FINRA continued to have an ownership interest in Nasdaq until 2006, according to regulatory filings. FINRA is also a Nasdaq customer, relying on the exchange's technology to operate a unit that provides various trade and quote data to brokerages so they can comply with reporting rules. And Nasdaq's annual report says the company subleases roughly 115,000 square feet of its downtown New York headquarters space from FINRA. Ketchum spent a total of 12 years with NASD and Nasdaq. He left his post as Nasdaq's president a month after current CEO Robert Greifeld arrived in 2003. Ketchum is not the only top financial regulator who has longstanding ties with Nasdaq. U.S. Securities and Exchange Commission Chairman Mary Schapiro is a previous head of NASD and FINRA. Neither FINRA nor Nasdaq would disclose how much money changes hands between them. But Nasdaq's bill for regulatory services could be in the tens of millions of dollars, based on a review of recent FINRA annual reports. WHAT FINRA WILL DO FINRA's role in the Facebook IPO will include determining the total value of all valid claims against Nasdaq. The exchange's compensation program is subject to approval by the SEC, which is also taking a broad look at Nasdaq's handling of the IPO. It is unclear how long the SEC will take to decide if Nasdaq's compensation proposal is adequate. Recent Nasdaq notices to traders say FINRA has agreed to review the Facebook claims and "related data," using criteria the exchange has already laid out. FINRA will base its evaluation on information from Nasdaq and other details the regulator may request from claimants, according to the alerts. The process will also include input from International Business Machines Corp, which Nasdaq has brought in to conduct a review of its market systems following the Facebook problem. Other details are not yet clear. Deciding who gets what compensation after this analysis could easily put FINRA in the legal crosshairs if aggrieved parties ultimately challenge the outcome in court, lawyers say. The market makers, which facilitate trades for brokers, say their orders were not executed in a timely fashion and that they were in the dark for hours about how many Facebook shares they owned. They ended up holding stock for clients when they thought they had already sold it, and took losses as the price of Facebook shares fell after initial gains on the first day of trading. Four market makers - UBS AG, Citigroup Inc, Knight Capital Group Inc and Citadel Securities - have collectively lost at least $115 million, according to company announcements and industry sources. CNBC has reported that UBS alone may have lost as much as $350 million, although the company has not confirmed that figure. THE SMELL TEST The concern is not so much that FINRA would intentionally skew its findings, but that allegations of bias by others on Wall Street could undermine the regulator's conclusions, industry observers say. Questions of fairness are already cropping up on other points. Rival exchanges are concerned about Nasdaq's offer of rebates, which would be an incentive to move business from them. Moreover, the exchanges have agreements in place to restrict compensation to certain sums, and the Nasdaq offer has already exceeded its own limit of $3 million a month. Some exchanges, whose liability is typically limited to $500,000 a month, are concerned that Nasdaq will set a precedent. But even critics say FINRA will probably go to great lengths to make the review fair in an effort to avoid risking its reputation. Still, that might not be enough. "It doesn't pass the smell test," said George Brunelle, a New York-based lawyer who advises brokerages. Even the appearance of conflict could worsen the negative perception of Wall Street among investors, he said. FINRA should not conduct the review, nor even know about its progress as it occurs, said Brunelle, former legal head of a surveillance unit of the New York Stock Exchange. The potential for even minimal interaction among Nasdaq and FINRA employees about information either may learn during the process is problematic, he said. "The SEC is fully qualified to handle this thing on its own, and it should," Brunelle said. The SEC, whose mission includes maintaining "fair, orderly and efficient markets," has broad oversight over U.S. exchanges and listed companies. Nasdaq falls into both categories. An SEC spokesman declined to comment. Keeping FINRA out of the process entirely would be difficult, though, given the regulatory functions it provides not just to brokerages and Nasdaq, but also for equities and options traded on a host of other U.S. exchanges, including the New York Stock Exchange, NYSE Amex, and BATS, an acronym for "Better Alternative Trading System." "FINRA is such a major player in the industry, it would be very hard for them not to be involved," said James Angel, associate professor of finance at Georgetown University. The SEC's involvement and the fact that nearly "every law firm in the industry is gearing up for litigation" should at least alleviate concerns that there will be too little investigation into Nasdaq's liability, Angel said. FINRA could take some precautions that could make its conclusions more palatable, said former SEC Chairman Harvey Pitt. It could, for example, set up a virtual firewall to prevent people sorting through the Facebook claims from interacting with other officials who may be looking at where Nasdaq's processes or systems may have gone wrong, said Pitt, who now heads Washington-based consultancy Kalorama Partners. The SEC's involvement "ought to allay concerns," Pitt added. Still, appointing a special master, such as an accountant or academic, to adjudicate the claims may be better, said Lawrence Harris, a finance and business economics professor at the University of Southern California. The SEC uses a similar process when distributing funds to harmed investors, Harris said. "It would potentially give at least the perception of more objectivity," said a financial services company's lawyer who requested anonymity because of the issue's sensitivity. (Additional reporting by John McCrank,David Gaffen and Herbert Lash; Editing by Jennifer Merritt, Martin Howell and Lisa Von Ahn) Tech Media Related Quotes and News Company Price Related News Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above. Edition: U.S. Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom Back to top Reuters.com Business Markets World Politics Technology Opinion Money Pictures Videos Site Index Legal Bankruptcy Law California Legal New York Legal Securities Law Support & Contact Support Corrections Connect with Reuters Twitter Facebook LinkedIn RSS Podcast Newsletters Mobile About Privacy Policy Terms of Use AdChoices Copyright Our Flagship financial information platform incorporating Reuters Insider An ultra-low latency infrastructure for electronic trading and data distribution A connected approach to governance, risk and compliance Our next generation legal research platform Our global tax workstation Thomsonreuters.com About Thomson Reuters Investor Relations Careers Contact Us Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests. NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.

Other News on Tuesday, 19 June 2012
Seven killed on Israel's Egypt and Gaza borders |
Suu Kyi says Myanmar must clarify citizenship laws |
Mexico to join Trans-Pacific Partnership talks |
Nigeria religious riots kill at least 52 |
France wants European solution to Sahel crisis |
Facebook to buy facial-recognition startup: sources |
Microsoft teases tablet plans |
NTT Docomo backs Silicon Valley photo-sharing startup |
Ex-AT&T employee admits leaking Apple, RIM info |
Justin Bieber grows up, gets even on Believe |
Egypt : Mohammed Morsi won with 52 percent
Greek conservatives poised to clinch coalition deal |
Syrian forces pound cities as Obama, Putin meet |
Seven killed on Israel's Egypt and Gaza borders |
Analysis: Somali rebels bruised, but may dodge knockout blow |
U.S. alarm as Egypt army undermines election result |
Japanese authorities sat on data showing radiation spread |
Chavez rejects poll debate, irking rival |
Myanmar's president promises second wave of reform |
Big powers seek progress on day two of Iran talks |
Eighteen killed as Turkish troops clash with PKK |
Microsoft tackles iPad with Surface tablet |
Analysis: Regulator seen conflicted in Nasdaq's Facebook mess |
Verizon raises FiOS bills, adds higher Web speeds |
Homeland, Community take top Critics Choice honors |
Radiohead shattered by crew death in stage collapse |
Pakistan Supreme Court disqualifies prime minister |
Suu Kyi greeted by cheers on return to Britain |
Greek rage to force bailout changes: Tsipras |
Analysis: No light at end of Egyptian tunnel for Israel |
Chavez has 16-point lead in latest Venezuela poll |
Saudi succession in spotlight after new heir named |
Oracle results ease IT spending worries |
Kodak sues Apple, claiming interference in patent sales |
Microsoft's tablet no threat to iPad: analysts |
Pearl raises cash, leads move to paid answers |
Apple supplier Imagination hit by competition fears |
Universal says EU regulators object to EMI deal |
Beatles film actor Victor Spinetti dies |
World chefs: Paco Roncero's take on molecular gastronomy |
The Voice UK tour cancelled on lack of interest |
Belgian DJ breaks record in radio show marathon |
Greece at new risk of being pushed off euro
Bodies of missing Tenn. mom, Jo Ann Bain, and daughter found
Female Breasts Are Bigger Than Ever
AMD Trinity Accelerated Processing Units Now in Volume Production
The Avengers (2012 film), made the second biggest opening- and single-day gross of all-time
AMD to Start Production of piledriver
Ivy Bridge Quad-Core, Four-Thread Desktop CPUs
Islamists Protest Lady Gaga's Concert in Indonesia
Japan Successfully Broadcasts an 8K Signal Over the Air
ECB boosts loans to 1 trillion Euro to stop credit crunch
Egypt : Mohammed Morsi won with 52 percent
What do you call 100,000 Frenchmen with their hands up
AMD Launches AMD Embedded R-Series APU Platform
Fed Should not Ignore Emerging Market Crisis
Fed casts shadow over India, emerging markets
Why are Chinese tourists so rude? A few insights

USD EUR - 1 year graph	VPN on MacOSX	BlogMeter 1.01