Swiss bank suing the US hi-tech stock market Nasdaq for 'gross mishandling' of the share sale, in which it lost SFr349m (£240m)

The Swiss bank UBS lost SFr349m (£240m) on the flotation of Facebook and is suing the US hi-tech stock market Nasdaq for "gross mishandling" of the share sale.

The loss, which drove the UBS investment banking arm to a SF130m loss, was caused when UBS entered too many orders for Facebook shares into the Nasdaq system which crashed under the weight of the record-breaking flotation, or initial public offering (IPO), and was unable to process the orders.

"As market marker in one of the largest IPOs in US history, we received significant orders from clients, including clients of our wealth management businesses. Due to multiple operational failures by Nasdaq, UBS's pre-market orders were not confirmed for several houses after the stock had commenced trading," the bank said.

This resulted in the bank entering orders "multiple times" and left UBS with more shares than it needed – and those shares have since fallen almost 50% in value.

Facebook floated on 18 May when the shares were priced at $35 each and despite briefly rising above that level have sunk below that price leaving investors with losses. Last week Facebook's first results presentation as a public company failed to convince investors with revenues of just £750m for the three months ending 30 June and shares now trade around $10 below the flotation price.

On the day of the flotation, Nasdaq was forced to delay the start of trading in the new shares following a glitch in its trading system.

UBS, which has a new management team following the alleged unauthorised trading by Kweku Adoboli who faces a fraud trial in September, disappointed the market with its second quarter pre-tax profits of SFr951m. It has the first bank to reveal the international investigation into attempts to manipulate Libor but, unlike Barclays, has not been fined for any wrongdoings but said again that it was cooperating with the authorities.

Sergio Ermotti, the new chief executive who used to run the investment bank, insisted that "many other banks are involved" in the Libor scandal. "It is crystal clear that UBS is not at the centre" of the attempts to manipulate the key interest rate, Ermotti said.