Amid vociferous complaints, the Securities and Exchange Commission has approved Nasdaq OMX Group's plan to pay out $62 million in compensation to firms that suffered losses during its botched execution of Facebook's initial public offering on May 18.

A technology glitch delayed the offering by roughly half-an-hour, prevented traders from getting an accurate overview of the shares they owned and/or sold, and led to many trades executing at an inferior price.

Under the approved plan, claims for compensation must arise solely from realized or unrealized direct trading losses from buy and sell orders submitted between 11:11 a.m. ET and 11:30 a.m. ET on May 18, 2012. The Financial Industry Regulatory Authority will process and evaluate all claims submitted and provide to the Nasdaq Board of Directors an analysis of the total value of eligible claims. Nasdaq would then file a proposed rule change with the SEC setting forth the amount of eligible claims and the amount it proposes to pay to members. All payments will be made in cash.

Among those finding fault with the plan are Citigroup and UBS AG, both of which weighed in via comment letters to the SEC. UBS, which estimated its losses “in excess of $350 million,” described Nasdaq's proposal to pay out $62 million in the aggregate as “woefully inadequate.”

Citi also used the word “inadequate.” “Nasdaq was grossly negligent in its handling of the Facebook IPO and, as such, Citi should be entitled to recover all its losses… not just a very small fraction as is currently the case under the proposed submission,” it wrote.

The door for future legal action by these and other aggrieved parties was left open by the SEC., which stopped short of granting Nasdaq immunity. It said that doing so went beyond the scope of the task before it, approving the settlement plan.

Citi had urged the Commission to ignore the request. “Nasdaq's claim that is immune to liability for mishandling the Facebook IPO because it was acting in a regulatory capacity is incorrect and unsupported by legal precedent,” it wrote. “The law is clear that Nasdaq does not enjoy immunity for its misdeeds where it was acting in its capacity as a profit-maximizing, publicly-held company.”

A common concern in comment letters was Nasdaq's calculation and use of the uniform benchmark price of $40.527 to determine the amount of compensation owed to a member. Contrary to Nasdaq's assertion, they said, a reasonably diligent member would not have mitigated losses during the first 45 minutes after execution reports were delivered to firms.

More specifically, some said the uniform benchmark price should be based on a volume-weighted average price (VWAP) of Facebook stock on Monday, May 21, 2012. In response, Nasdaq reasserted that the use of the VWAP of Facebook stock during the 45 minute window after 1:50 p.m. is appropriate as the benchmark price because 45 minutes did provide members enough time to identify and mitigate any unexpected losses or unanticipated positions.

Because it is not prepared to increase the size of the $62 million accommodation pool, Nasdaq added that “a change in the benchmark price would actually reduce the funds available to claimants that acted quickly to mitigate their losses, for the benefit of those that did not.”