Facebook’s debut marred by flaws

The US Securities and Exchange Commission (SEC) said that it would review the day’s trading,which included an unexpected delay,missing trade execution messages and at one point,having to fill orders by hand.

A number of Facebook’s underwriting banks argued after the market closed that if trading had operated normally from the start,shares of Facebook — which ended the day at $38.23,little changed from its $38 offer price — could have risen significantly higher. Some were hoping for a gain of 10 to 20 per cent,two people close to the situation said.

The Nasdaq stock market had said trading in Facebook shares would begin at 11 a.m. But at 11 a.m.,Facebook’s lead underwriter,Morgan Stanley,requested a delay. That in and of itself was not unusual — but what happened next was. Traders were first informed that the company’s opening price was $42 a share. But orders failed to be executed.”

When Facebook finally opened at $42.05,some traders’ monitors,which should have reflected a steady stream of orders for company shares,were frozen. Worse,some reflected a mess of conflicting information.

Shares in Facebook initially appeared to climb,but by 11:30 began the first of several plunges. With Nasdaq unable to deliver trade execution messages until midafternoon,traders did not know whether their orders had gone through.

Morgan Stanley appeared to hold the line: despite testing the offer price limit,Facebook shares never broke below the $38 level,sparing the social network from a dreaded “busted IPO” on its first day as a public company.