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Nasdaq Seeks to Stem Damage From Facebook IPO: Source

Thursday, 24 May 2012 | 2:18 PM ET

Nasdaqexecutives are making an aggressive, behind the scenes push to stem the damage from the FacebookIPO, CNBC has learned.

Ben Hider | Getty Images

A source with direct knowledge of Nasdaq’s efforts says executives have made “dozens and dozens” of phone calls over the past several days to bankers, financial sponsors, companies that have committed to Nasdaq and those that are considering a possible listing.

The source says Nasdaq officials are “concerned” about the possibility of Facebook leaving for the New York Stock Exchange and believe the fallout from the IPO could have a lasting impact on its ability to lure companies to list on the exchange in the future.

The move comes after a series of embarrassing technical glitches that marred Facebook’s first day of trading on the Nasdaq last Friday. People familiar with the matter told CNBC Wednesday that the social networking giant is now open to moving its listing to the rival NYSE.

Despite worries about such a move, the source says Nasdaq execs admit they won’t know the true impact “for months.”

Is Facebook Moving to Another Exchange?
CNBC's Scott Wapner reports the Nasdaq is making an aggressive push to try and stem the Facebook damage on its initial offering and discussing whether underwriter, Morgan Stanley or the Nasdaq is to blame for the trading blunder, with CNBC's Gary Kaminsky and Bob Pisani.

CEO Bob Greifeld is also said to still have internal support, with the source saying the chief executive “still has the support of the executive team.”

Meanwhile, a source told CNBC that the NYSE is “accelerating its efforts” to talk to companies who’ve recently filed plans to go public and are either on the fence about where they’ll list, or have chosen the Nasdaq and may be inclined to reconsider.

At the same time, the source says that “no overt pitches” have been made from senior levels of the company to Facebook about moving its listing because it would be “inappropriate at this time”.

The source also tells CNBC that Facebook itself has not contacted the NYSE inquiring about a switch.

The repercussions from botched IPO deepened Thursday as Fidelity Investments found itself dealing with "thousands" of customers with order problems and Knight Capitaldemanded tens of millions of dollars in compensation from Nasdaqfor trading-related losses.

The pressure on Nasdaq in particular was intense, not only from investor lawsuits and angry customers, but from the outside prospect it could lose the Facebook listing entirely after having just obtained it.

Advisers familiar with the situation at Fidelity said many investors are now finding out, nearly a week after the fact, that their orders were not executed at the prices they thought.

Fidelity, in a statement, said it was working with regulators and market makers on its clients' issues "and we will continue to do so until we are confident that Nasdaq has done everything it can to mitigate the impact to our customers."

Knight Capital's claims could end up dwarfing the Fidelity issue"s, though. The amount of compensation sought by Knight, a leading market maker in U.S. equities, is nearly three times what Nasdaq has aside as compensation for trading losses.

"They are certainly facing the specter of some significant lawsuits if this pool is not enough," a source familiar with Knight's situation told Reuters.

Other firms said they did not have similar problems, though, raising questions about the scope of the losses.

"The problems were where people were trying to cancel orders; we didn't have that," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York. "Because we didn't have a problem doesn't mean there weren't problems

—Reuters contributed to this report.

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