Nasdaq has agreed to pay $26.5 million to settle a class action lawsuit over the technical glitches that marred the IPO of Facebook in 2012.
The suit, brought on behalf of retail investors who lost out during the botched IPO, accused Nasdaq of covering up flaws in its technology and failing to adequately test its systems ahead of the social media group's market debut.
The 18 May IPO was beset by technical glitches - including a malfunction in the system's design for processing order cancellations - that left market makers unsure of whether trades went through.
The malfunctions costs market makers about $500 million, and later that year Nasdaq agreed a $62 million package to compensate them for their losses. However, the deal failed to take account of the claims of ordinary retail investors who fell foul of immunity claims by exchanges over the policing of their markets.
"This is the first case that we are aware of where a class of investors has sued an exchange for market disruption, and the court has sustained those claims," Vincent Cappucci, one of the lawyers representing retail investors harmed in the IPO, told Reuters.