Nasdaq's $40 million payout plan for the mishandling of the Facebook IPO is "underwhelming at best," according to one of the market makers caught up in that botched initial day of trading.
Knight Capital Group CEO Thomas Joyce pegged the trading losses at around $200 million, with his own firm's losses ranging between $30 million and $35 million, according to Bloomberg.
Previous estimates said the losses would exceed $100 million.
Knight Capital executes stock orders from individual investors through retail brokers and guarantees the price of a transaction, which means it lost money on Facebook's opening day when the system broke down and multiple orders failed to go through at specific prices.
Facebook's first day started after a 30-minute delay, and traders complained they were not able to confirm changes or cancellations made to Facebook orders. Later on in the morning, some traders said they had not received confirmation from Nasdaq that transactions had actually been completed.
Nasdaq's plan, which is awaiting the Securities and Exchange Commission's approval, has the exchange paying $13.7 million in cash to member firms that suffered losses, including the profit it made from first-day trading. The rest would come in the form of trading discounts.
Former SEC Commission chief Harvey Pitt told Reuters that plan is not enough.
Pitt said Nasdaq should instead conduct an independent internal review of the event and allow the independent group to decide how much Nasdaq should set aside and how the money would be issued.