UBS to sue Nasdaq over handling of Facebook shares buy

SWISS banking giant UBS is to take legal action against the Nasdaq stock market over the botched flotation of Facebook after reporting a 58 per cent slump in second-quarter profits.

The group said it incurred a SFr349 million (£228m) loss due to problems executing electronic trades on the day of Facebook’s listing on Nasdaq in May.

It meant UBS received more Facebook shares than its clients had ordered, and the bank said it would take appropriate legal action against Nasdaq to address its “gross mishandling of the
offering and its substantial failures to perform its duties” over the flotation.

Facebook last week reported a 32 per cent rise in second-quarter revenues to $1.2 billion (£766m) in its first set of results since going public. Its shares have lost around 40 per cent of their value since their debut.

UBS posted a net profit of SFr425m for the three months to June, down from SFr1 billion a year earlier and well below analysts’ expectations of around SFr1.1bn.

Chief executive Sergio Ermotti blamed the decline on “challenging conditions marked by increased volatility and greater client caution”.

The Zurich-based bank, which employed 63,520 people at the end of June, is in the process of cutting around 3,500 jobs and will “continue to explore
avenues to improve efficiency”, Ermotti added.

He said: “Looking ahead, we will continue to focus on prudent liquidity management, further reducing risk-weighted assets and delivering the best possible service to our clients.”

The group’s investment banking fell to a pre-tax loss of SFr130m, compared with a profit of SFr383m a year ago, and Bank Sarasin analyst Rainer Skierka described the division’s performance as a “big disappointment”.