UBS losses on Facebook set to soar to $350m

UBS is thought to have lost up to $350m (£226m) on the botched Facebook float last month.

The Swiss investment bank racked up the losses, far higher than those initially estimated, after placing an order for one million shares in the social networking giant. When it did not receive confirmation of the trade it repeated the order several times, each of which was fulfilled, leaving it with more stock than it had intended, according to broadcaster CNBC.

The expected losses go well beyond the $30m originally suggested by industry sources. Now UBS, which has not confirmed the figures, is said to be preparing legal action against exchange operator Nasdaq.

A spokesman for the bank said the amount loss was “not material” and added: “Given the size of our US equities business and our role as a major market maker, UBS was affected by these issues, as we believe other market participants may have been... We are continuing to consider avenues to recover our losses in this matter, but have not yet taken legal action.”

UBS was one of four major market makers in the Facebook deal, along with Citigroup’s Automated Trading Desk, Knight Capital, and Citadel Securities. Until Friday, the total loss for the group was thought to be upwards of $115m.

Last week Nasdaq apologised for its mistakes in the float, on 18 May, and said it would offer a total of $40m in cash and rebates to clients harmed.

Its proposal has already been criticised, however, as too little, while rival index New York Stock Exchange claimed it was “wholly inconsistent with fair practice and an undue burden on competition to allow Nasdaq to use pricing and other machinations as a guise for fairly compensating those impacted” in the float.

Facebook debuted with a valuation of $104bn but its $38 share price has fallen quickly.

On Friday it closed up 79 cents, or three per cent, to $27.10 after announcing an “app centre” recommending new add-on software.