Opening of Another Nasdaq IPO Delayed
December 6, 2012
WhiteHorse Finance chief executive Jay Carvell may have rung the opening bell Wednesday, signaling the start of trading for the first time in shares of the lender to small businesses.
But, in an echo of the delayed start of trading in shares offered to the public by Facebook for the first time in May, trading in WhiteHorse shares did not go off as planned.
The Nasdaq Stock Market, home to both delayed initial offerings, attributed Wednesday’s delay to a “human error.’’ The Facebook delay was caused by technical problems on the exchange’s IPO Cross system. Facebook trading did not get straightened out until nearly 2 p.m. on its first day of trading.
"Due to a NASDAQ human error, the initial public offering of WhiteHorse Finance Inc has been rescheduled for approximately 3:00 p.m. EST," the exchange operator said in a notice to members at 1:41 p.m.
Reuters reported that Nasdaq, WhiteHorse and its underwriter agreed to push initial trading in shares beyond the original intended 11 a.m. start. tar But instead of extending the IPO, a member of Nasdaq's market surveillance team canceled it, according to the wire service. There was no computer glitch, this time around.
WhiteHorse, in a company release, said that, nonetheless, it sold 6,666,667 shares of its common stock at $15.00 per share, raising $100 million in gross proceeds.
The much-larger Facebook IPO wound up costing Nasdaq and market makers more significant amounts. Nasdaq set aside $62 million to compensate firms hurt by the snafus in handling orders. One market maker, UBS, claimed to have lost hundreds of millions of dollars in the debacle.
After the market closed, Nasdaq said “all open and pending orders received up until 1:59:59PM EST were canceled back to clients” and that the “cross completed just after 3:00PM EST, with a total of 1,263,605 shares executed at a price of $14.00.”
Nasdaq said it is “reviewing the events that led to the error and will takes steps to prevent a future occurrence.“