Why BATS Pulled Its IPO On Friday After Its Huge Technical Disaster: Investors Were In A State Of Revolt

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Photo: HUD

On Friday we saw the worst IPO debacle of all time.BATS, an alternative stock trading platform, was forced to completely pull its offering after the stock had an insta-flash crash upon its first attempt to sell itself.

The company tried for a while to re-open trading, but eventually decided to not go public at all on Friday, before ultimately withdrawing its offering entirely, with no current plans to try again.

Because BATS was listing its stock on its own exchange, that technical glitch was a huge public blow to the entire premise of the company (which does control 11% of stock market volume).

So why did the company really pull the offering, even once the technical glitch was worked out?

Because the investors who bought the stock the night before were in revolt, according to WSJ

By midday Friday, BATS said it resolved the technical problems that had forced a halt on the stock. But by then the exchange operator was facing a revolt from the mutual-fund and hedge-fund managers who had committed to buying the shares at $16 each. They wanted out of the deal and pushed BATS and its underwriters, led by Morgan Stanley, to withdraw the IPO and cancel their trades, the people said. Morgan Stanley, which along with several underwriters is also a BATS investor, soon joined in, advocating pulling the plug, they said.

(Via Morning Money)

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