UBS shares tumble after Facebook debacle

Published:  1 Aug at 9 AM

UBS has blamed a loss of 349 million Swiss francs on problems associated with the flotation of Facebook. The Swiss bank is claiming that a mishandling by Nasdaq meant that it ended up with far more shares in the social networking site than it had initially ordered. Facebook shares have tumbled in price following the stock exchange launch.

UBS profits for the second quarter were 425 million Swiss franks compared to 1 billion francs for the same three months in 2011. The bank said it will be looking for compensation from Nasdaq for a mistake which has seen UBS shares drop by around 6 per cent.

According to the Swiss bank its losses have resulted from Nasdaq’s failure to carry out its obligations including opening up the Facebook stock so it could be traded and halting that trading during the day. UBS claims that the orders it had made before the markets opened were not confirmed until trading was well underway.

This meant that orders for stock were re-entered on several occasions before Nasdaq confirmed that they had been received. In the end Nasdaq put all of the stock orders through meaning that UBS ended up with far more stock than its clients had ever asked for.

Since floating in May, Facebook shares have dropped 39 per cent below the original sale price. As well as the Nasdaq problem, UBS said that profits had been hit by the problems being experienced across the European banking system. The group said it was currently looking at ways to cut costs and has already announced that 3,500 jobs are to go.