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(REUTERS) Nasdaq sued for canceling Corinthian trades
Nasdaq sued for canceling Corinthian trades

NEW YORK, Dec 9 (Reuters) - Investors sued the Nasdaq Stock
Market Inc. <NDAQ.OB> claiming they lost money when the stock
market canceled trades of Corinthian Colleges Inc. <COCO.O>
after its shares fell 32 percent in 12 minutes on Friday.
A lawsuit filed Dec. 8 in the United States District Court
of the Southern District of New York on behalf of DL Capital
Group LLC and "all others similarly situated" seeks
compensatory damages for damages sustained "as a result of
defendants' wrongdoing."
On Friday, shares of Corinthian Colleges, a for-profit
college operator, sank from $57.45 at 10:46 a.m. EST to $38.97
in 12 minutes.
Nasdaq halted trading in the stock Friday for what it
called "extraordinary market activity." It said an "erroneous
trade," in which multiple orders were routed to several trading
venues by a single customer, prompted the "extraordinary market
activity."
The halt lasted for roughly an hour and then Nasdaq allowed
Corinthian shares to trade for approximately 45 minutes before
informing investors it would cancel trades executed during the
12 minutes, the suit alleges.
DL Capital said it purchased Corinthian shares during the
12 minute period, and sold its shares for a profit between
11:55 a.m. and 12:30 p.m.
But Nasdaq's decision, announced at 12:30 p.m., that it
would cancel all Corinthian trades during that 12 minute
period, left it facing a loss, the suit alleges.
"As a result, DL Capital's purchase of COCO shares was
canceled, but its sale of those same shares was not canceled,"
the suit stated.
"If DL Capital had known that its purchase of COCO shares
would be canceled, it would not have sold those same shares
after trading resumed - i.e. it would not have sold shares
which it did not own," the suit stated.
Nasdaq said it had no comment. Lawyers for DL Capital could
not immediately be reached for comment.
The suit said it was bringing the action on behalf of DL
Capital as well as a class, consisting of those who traded the
common stock between 10:46 a.m. and the time Nasdaq announced
the cancellation of all trades.
((Reporting by Nicole Maestri; editing by Phil Berlowitz;
Reuters Messaging: [e-mail];
[phone]))
REUTERS
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