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UBS to Take $356 Million Loss on Facebook IPO

Maria Bartiromo and Javier E. David
Tuesday, 31 Jul 2012 | 6:05 PM ET

The fallout from the botched Facebook IPO continues as Swiss banking giant UBS announced it took a $356 million hit on the hotly-anticipated stock sale and that it intends to sue Nasdaq OMX Groupfor what it calls the stock market’s “gross mishandling” of the deal.

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The reported loss confirms earlier speculation that UBS's loss would top $350 million.

Sources within the bank said UBS’s trading desk electronically booked orders for Facebook stock, but failed to receive proper confirmation. That prompted traders to re-send the trades, leading to duplicated orders that far exceeded UBS’s intended allocation, these people said.

The Facebook Blame Game
CNBC's Maria Bartiromo reports on UBS' Facebook fallout. Meanwhile Daryl Jones, Hedgeye Risk Management, and Ron Geffner, Sadis & Goldberg Partner, discuss whether UBS' legal action can open the door to further lawsuits against Facebook.

They said UBS is confident that its trading desk was not at fault, which is why it's seeking to recoup its losses from Nasdaq in the courts.

However, UBS's loss from the trade was 10 times worse than other market makers, prompting speculation about how much Nasdaq may really be to blame. By comparison, Nasdaq's plan for compensating customers who lost money on the deal totals just $62 million.

Facebook’s IPO was plagued by missteps and trading errors that caused other investors to be shut out of the deal altogether.

Facebook shares fell to a new low of $21.61 Tuesday, down more than 50 percent from its debut price of $38, though closed out the day at $21.71. UBS's US-traded shares fell more than 4 percent, closing at $10.60. (Click here for the latest after-hours quotes for FB and UBS.)

— Reported by Maria Bartiromo and written by Javier David. Reuters contributed to this article.

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