UBS suing Nasdaq over Facebook

Nasdaq CEO Bob Greifeld is no friend of UBS.

The Swiss banking giant slammed Nasdaq for its “gross mishandling” of Facebook’s stock sale and said it would sue the exchange operator to recoup $356 million in losses tied to the botched offering.

The eye-popping loss was far larger than those of the other trading firms — Knight Capital, Citadel and Citigroup — burned by the fiasco and brings the total trading losses from the Nasdaq listing to more than $450 million.

UBS said yesterday that it will sue Nasdaq for every single penny of the loss, which wiped out half the bank’s second-quarter earnings and delivered another blow to the struggling firm.

The bank’s decision to sue the exchange represents another black eye for Greifeld, who had hoped to put the embarrassing Facebook blunder behind him.

Just last week, Greifeld upped the remuneration package to cover losses from the Facebook IPO to $62 million in cash and did away with trading credits that were part of the original $40 million proposal.

Greifeld called the latest plan “definitive” and suggested that it would satisfy most of the trading firms involved in the fiasco, while at the same time reiterating that the exchange benefits from unique legal protections from lawsuits.

Nasdaq has argued that under current exchange rules it owes market makers a max of $500,000 in damages related to Facebook.

At least some investors, however, believe that a UBS suit could pose a major problem for Greifeld, and they sent Nasdaq’s shares down nearly 2 percent to close at $22.70.

While UBS’s exact legal strategy isn’t clear, sources say that the kerfuffle between UBS and Nasdaq could get ugly.

UBS intends on forgoing an arbitration, which is the typical method of resolving disputes among member exchanges, in favor of a possibly pitched legal battle against Greifeld, sources said.

UBS wracked up losses when its trading systems repeatedly placed orders for Facebook shares because they were unable to get confirmation from Nasdaq that the orders had been placed.

Nasdaq, which has hired outside consultant IBM to conduct a review of its stock-listing systems, admits that there were technical glitches that led to delays and other problems.

UBS said the Facebook fiasco contributed to a 58 percent drop in overall profits in the second quarter, to $434 million, or 11 cents per share.