This was one initial public offering that Nasdaq executives sure didn’t “like”.

One year after Nasdaq botched the Facebook IPO, the Securities and Exchange Commission has handed down its punishment, charging NASDAQ with securities laws violations resulting from its poor systems and decision-making during IPO and secondary market trading of Facebook shares. In turn, NASDAQ has agreed to settle the SEC’s charges by paying a $10 million penalty – the largest ever against an exchange.

Last May, Nasdaq wooed the listing away from its archrival in listings, the New York Stock Exchange, and made a point of having its members and interested trading parties test its IPO Cross system, using a fake symbol. The tests took place a week in advance, at the start of the week and the afternoon before the launch.

And the shares failed to open on time. Instead of 11:00 a.m., the first trading took place at 11:30 a.m. on May 18, 2012 and by noon Nasdaq said it was investigating a trade messaging problem. Execution orders were not getting delivered from the IPO Cross.

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, according to the SEC. 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.

“This action against NASDAQ tells the tale of how poorly designed systems and hasty decision-making not only disrupted one of the largest IPOs in history, but produced serious and pervasive violations of fundamental rules governing our markets,” said George Canellos, co-director of the SEC’s Division of Enforcement.

For its part, NASDAQ OMX CEO Robert Greifeld stated that: “Prior to May 18, 2012, NASDAQ had conducted more than a hundred IPOs using the same or similarly designed systems, without incident. While we prepared extensively for the Facebook initial public offering, including thorough tests of our systems with member firms, the challenges we encountered that day were unprecedented.”

Greifeld added that within the past year the exchange has put in place “innovative” safeguards such as creating dedicated positions for Chief Information Officer and Global Head of Market Systems, and changing its IPO and opening and closing crosses as well as deploying new global processes for changing its technology.