December 5, 2012 7:55 pm

Nasdaq bungles WhiteHorse IPO

Nasdaq OMX, the exchange operator that botched the Facebook public float, was caught at the centre of another troubled attempt to list an initial public offering on Wednesday.

The exchange was forced to postpone a planned $100m listing of WhiteHorse Finance, a business-development company that originates and invests in loans to small companies, after what it described as a human error.

People familiar with the situation said WhiteHorse and its underwriters had chosen to extend the start time for trading by five minutes and in its effort to communicate the decision, Nasdaq inadvertently said the listing had been cancelled.

In May, a systems error at Nasdaq delayed and plagued the opening hours of this year’s largest IPO, Facebook’s $16.1bn float, that left the market for new share issues rattled for weeks.

On Wednesday, Nasdaq insisted that the error was caused by its MarketWatch division, which is in charge of communicating IPO launches, and was not due to its technology.

The exchange said it then cancelled the queue of pending orders in WhiteHorse, adding that no positions had been taken and no losses were suffered by investors.

“Due to a Nasdaq human error, the initial public offering of WhiteHorse Finance has been rescheduled,” the company said in an alert to traders at 1:41pm.

Nasdaq said it rescheduled the IPO for later in the afternoon and the listing occurred without any further issues.

WhiteHorse closed 7.3 per cent lower to $13.90 after having offered 6.7m shares a day earlier at a price of $15 per share. Shares in Nasdaq OMX closed 2 per cent lower, with most of its losses on the day coming after the mishap.

Deutsche Bank, JPMorgan Chase, Citigroup and Barclays were listed as lead underwriters of the offering. All declined to comment. Nasdaq declined to comment beyond the trade alerts. WhiteHorse did not respond to a request for comment.

Nasdaq’s listings business has faced scrutiny since the high-profile botch of the Facebook float as brokers look to recoup some $500m in losses they say were suffered as a result.

The exchange has offered a $62m voluntary compensation plan, which is awaiting regulatory approval from the Securities and Exchange Commission. Some, including Citigroup, have not ruled out a lawsuit to recoup their full losses from the Facebook IPO.

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