Nasdaq hikes Facebook IPO cash payout to $62 million

NEW YORK: Nasdaq OMX Group, the second-biggest US stock exchange owner, revamped its proposal to compensate brokers that lost money in the public debut of Facebook (FB), boosting the payout to $62 million cash.

The amendment, which follows criticism from Wall Street market makers and exchanges about the original plan, increases the compensation pool from $40 million and does away with a proposal to credit most of the money through reduced trading costs, according to a submission with the Securities and Exchange Commission. Member brokers who accommodated customers for losses will get paid first, it said.

"It's an attempt by Nasdaq to show that they recognize that their clients are very unhappy," Larry Harris, a professor of finance and business economics at the University of Southern California and a former chief economist at the SEC, said. "Clearly, making it all-cash is more palatable for regulators and for competitors."

Delays and malfunctions on the Nasdaq Stock Market were the first signs of trouble in the May 18 Facebook initial public offering that burned investors, spurred losses on Wall Street and prompted lawsuits against the company, its exchange and the underwriters.