UBS Also Urges S.E.C. to Reject Nasdaq\'s Proposal

The big banks are pointing their pitchforks toward Nasdaq.

UBS is the latest financial firm to shoot down Nasdaq's $62 million proposal to compensate customers who lost money during Facebook‘s bungled initial public offering. In a letter sent to the Securities and Exchange Commission on Wednesday, UBS called on the regulatory agency to reject the exchange's proposal, describing it as “inadequate to address the magnitude of  Nasdaq's unprecedented failures.”

The Swiss bank, which has estimated its Facebook I.P.O. losses at $356 million, is part of very vocal group of Nasdaq customers who are pushing the exchange to increase its compensation plan. On Wednesday, Citigroup sent its own missive to the S.E.C., enumerating several reasons that it felt Nasdaq is liable for its losses and acted irresponsibly on the day of Facebook's debut.

In its letter, UBS was equally harsh, taking Nasdaq to task for failing to execute trades during the I.P.O. and causing “tremendous, unanticipated stress on UBS's retail marketing system.”

“UBS ended up with a substantial unintended long position in Facebook shares, the liquidation of  which â€" due to the rapid decline in the price of  Facebook stock both on the day of the I.P.O. and in the days and weeks after â€" resulted in losses in excess of $350 million,” the company said. “Simply put, Nasdaq's proposal to pay $62 million in the aggregate for all Facebook-related claims is woefully inadequate.”

The firm also said that Nasdaq's proposed compensation plan would limit the ability to pursue “other legitimate claims” against the exchange. UBS says this requirement is unfair to firms who believe that the proposal is insufficient: “If  the rule is adopted as proposed, we suspect that a number of  firms may be left with no choice but to decline to participate in the program in order to preserve their rights.”

“This would lead to a perverse outcome, with the firms that suffered the smallest harm participating in the program and those that suffered the greatest harm excluded from the program,” UBS added.