UBS slammed by Facebook IPO losses

Arnd Wiegmann / REUTERS

People walk behind the logo of Swiss bank UBS in Zurich.

By Roland Jones, NBC News

UBS said Tuesday its earnings in the second quarter were more than halved because of losses from the botched Facebook public stock offering in mid-May.

The Swiss bank said it plans to take legal action against the Nasdaq stock market, which handled the social network?s IPO.

UBS said its net profit in the quarter fell to 425 million Swiss francs, or $434 million, with $357 million in losses coming from?what UBS called ?the gross mishandling? of the Facebook IPO by the Nasdaq Stock Market.

The Nasdaq exposed UBS, as a market maker for the much-anticipated IPO, to ?far more shares than our clients had ordered,? by filling trading orders multiple times, the bank said.

?As a market maker in one of the largest IPOs in U.S. history, we received significant orders from clients, including clients of our wealth management businesses,? UBS said.

?We will take appropriate legal action against Nasdaq to address its gross mishandling of the offering and its substantial failures to perform its duties,? UBS added. ?Although as in all such matters there can be no assurance as to the amount of any recovery we may obtain, we intend to pursue compensation for the full extent of our losses.?

The quarterly losses at UBS are far higher than the $62 million the Nasdaq has set aside to offer as compensation to clients affected by the problems with Facebook?s initial public offering in May.

Facebook?s stock offering was marred by trading glitches and has triggered several lawsuits. The company?s share price has since dropped almost 40 percent from its initial price of $38.

UBS said its quarterly loss was also due to ?challenging conditions marked by increased volatility and greater client caution.? UBS had reported a profit in the same period one year ago.

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Source: http://marketday.nbcnews.com/_news/2012/07/31/13050085-ubs-slammed-by-facebook-ipo-losses?lite

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