Some Facebook investors had hoped to sell the much-hyped shares on the issue day to take advantage of pent-up buyer demand, but technical problems kept many investors from buying shares in the morning or selling them later in the day.
A payout is being issued to reimburse those who lost money because of the fault.
Facebook's shares went on sale at $38 a share on May 18th, rose sharply in early trading, but ended the day barely above the starting level, and have floundered since, falling to around $25 a share.
Nasdaq says it will reimburse those who tried to sell into the first-day bounce at $42 or less, but either couldn't sell or sold at a lower price than they intended.
The $40 million is more than 10 times the $3 million previously paid by Nasdaq for technical errors, but investors claim it will not be enough to cover losses.
Nasdaq's chief rival, the New York Stock Exchange, has accused Nasdaq of giving itself an unfair advantage, saying the move gives investors an incentive to move more of their trading to Nasdaq.
In this huge IPO scandal, at least something is being done to make recompense for those who unfairly lost money due to the IPO.