Compensating for Facebook IPO Failures - SIFMA Comment Letter to the SEC Regarding a Proposed Amendment to NASDAQ's "Limitation of Liability" Rule

In response to NASDAQ's proposal to modify NASDAQ Rule 4626 [the proposed rule change starts at the bottom right of the linked page] to compensate member firms in light of the technical malfunctions experienced during the Facebook IPO, SIFMA has filed a comment letter asserting that the proposed amendment presents significant policy and procedural issues. SIFMA states that the proposed amendment is being used by NASDAQ to establish the grounds to claim regulatory immunity from a lawsuit, which SIFMA does not believe is appropriate, as it asserts that NASDAQ was acting as a for-profit market participant (and thus not entitled to immunity) rather than as an SRO (entitled to quasi-governmental immunity). SIFMA recommends that the SEC clearly state in any approval or disapproval of the proposal that its action does not constitute a factual or legal determination regarding NASDAQ’s role in the Facebook IPO. SIFMA also requests that NASDAQ waive the one-year time limitation for bringing claims against NASDAQ with respect to the Facebook IPO, and that member firms should not be required to release NASDAQ from liability before they receive final payments under the compensation plan.

View letter here (links externally to SIFMA website).