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Trading firm says net income slammed by Facebook IPO

Knight Capital Group, the largest trader of U.S. shares by volume, said Wednesday its quarterly net income fell 81.3 percent in its most recent quarter, slammed by trading losses that resulted from the confusion that surrounded the Facebook public stock offering.

Technical hiccups on the Nasdaq stock exchange on Facebook’s first day of trading in mid-May led to a delayed opening for the stock and left investors wondering if their orders to buy or sell the social network’s stock went through.

Angry investors -- from major investment banks to small retail investors -- have lined up to condemn Nasdaq for the technical glitches that marred the first day of trading for Facebook’s IPO, leading to complaints of slow order confirmations and too many shares offered at too high a price.

According to estimates, investors and financial firms have lost a collective $500 million on Facebook shares that they didn’t want, were unable to sell as the company’s share price began falling shortly after the IPO, or had to take back from their angry customers.

In a statement accompanying the earnings report Wednesday, Thomas M. Joyce, Knight’s chairman and CEO, said Knight is “evaluating all legal rights and remedies in connection with the Facebook IPO.”

In early June the Nasdaq put up $40 million to compensate clients impacted by Facebook’s botched public stock offering.

Knight reported consolidated earnings of $3.3 million for the second quarter of 2012, down from $17.6 million in the second quarter of 2011.

Knight’s institutional sales and trading division's revenue sank to $109.7 million from $134.9 million one year before. Facebook’s IPO cost the division $9.4 million in trading losses.

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