Cnet reports that the SEC is charging the American stock exchange with a $10 million penalty over poor decisions made as well as systems set up during the IPO and secondary trading scheme for shares of the world's largest social network.

The SEC issued a memo on Wednesday detailing the rationale behind the decision. Here's an excerpt:

"Exchanges have an obligation to ensure that their systems, processes, and contingency planning are robust and adequate to manage an IPO without disruption to the market. According to the SEC's order instituting settled administrative proceedings, despite widespread anticipation that the Facebook IPO would be among the largest in history with huge numbers of investors participating, a design limitation in Nasdaq's system to match IPO buy and sell orders caused disruptions to the Facebook IPO. Nasdaq then made a series of ill-fated decisions that led to the rules violations.

According to the SEC's order, several members of Nasdaq's senior leadership team convened a "Code Blue" conference call and decided not to delay the start of secondary market trading in Facebook with the expectation that they had fixed the system limitation by removing a few lines of computer code. However, they did not understand the root cause of the problem. Nasdaq's decision to initiate trading before fully understanding the problem caused violations of several rules, including Nasdaq's fundamental rule governing the price/time priority for executing trade orders. The problem caused more than 30,000 Facebook orders to remain stuck in Nasdaq's system for more than two hours when they should have been promptly executed or cancelled."