The Buzz
Knight Capital stock surges on buyout offer from Getco
November 28, 2012: 11:30 AM ET
Despite a recent surge, shares of Knight Capital are down 71% year-to-date.
Let the bidding games for Knight Capital (KCG) begin.
The struggling trading firm received its first public buyout offer Wednesday from rival and partial owner Getco.
In an SEC filing, Chicago-based Getco said it was offering $3.50 a share, representing an 18% premium over Knight's closing price on Tuesday. The news sent shares of Knight surging Wednesday, with the stock briefly touching the $3.50 mark.
Under the proposed terms, Getco Chief Executive Dan Coleman would become chairman and CEO of the merged company. Knight CEO Tom Joyce, whose contract is set to expire on Dec. 31, would become the non-executive chairman. Coleman said the new firm would be a "magnet to customers, talented traders and technologists, which is especially important in an environment of lower trading volumes and higher regulatory engagement."
Knight Capital acts as a middleman in the markets, completing investors' orders to buy and sell stocks. In August, the company lost $440 million after a trading software snafu sent numerous erroneous orders in NYSE-listed securities into the market.
Getco is a high speed electronics trading firm that was part of a consortium that rescued Knight after the August debacle.
The group, which also included TD Ameritrade (AMTD), Blackstone Group (BX), Stifel Nicolaus, Jefferies Group (JEF) and Stephens Inc., paid $400 million to acquire a majority stake in Knight.
Related: Troubled broker Knight Capital may be for sale
But the trading blunder left Knight in a precarious financial position.
The firm has lost out on trading orders and seen an exodus of several high-level executives. Whether or not the company inks a final deal to sell itself, Knight is expected to be forced to radically restructure the company, according to analysts. Any next step for the company will likely result in the loss of a majority of Knight's 1,600 employees.
Knight Capital confirmed that it received the letter from Getco and declined to comment further. The firm is expected to see other bidders emerge in the next few days, including Virtu Financial, another high-speed trading firm. Virtu did not return calls for comment.
In August, during its frantic hunt for rescue financing, trading firm Citadel made two offers for Knight. This time around, Citadel is unlikely to bid, according to a source close to the situation.
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Knight Capital back in business
Knight Capital Group is back up and running Thursday, a day after a power outage knocked the company's systems offline.
As Wall Street returned to business Wednesday morning, following a two-day hurricane-related shutdown, Knight experienced a backup generator power failure at its headquarters in Jersey City, N.J. The issue affected all equities trading, as well as electronic foreign exchange and electronic fixed income trading.
The company, which plays a key role on MORE
Hibah Yousuf - Nov 1, 2012 9:41 AM ETPosted in: generator, Hurricane Sandy, knight, Knight Capital Group, power, stock orders, stocks, trading -
Nasdaq defends $62 million Facebook payout
Nasdaq defended its proposed $62 million compensation plan for firms hurt by its botched IPO of Facebook (FB).
In a letter sent to the Securities and Exchange Commission late Wednesday, Nasdaq (NDAQ) called the payout "fair and equitable."
The exchange operator told the SEC that, by law, it only owes trading firms, or so-called market makers, $500,000 based on SEC limits. "The proposed accommodation pool goes well beyond what is required under current MORE
Maureen Farrell - Sep 20, 2012 2:17 PM ET -
Nasdaq can't shake Facebook troubles
Nasdaq can't seem to put the Facebook IPO debacle behind it.
Shortly after the botched IPO, Nasdaq proposed a $40 million settlement to compensate brokers who were affected by trading glitches on Facebook's opening day (May 18).
Nasdaq (NDAQ) upped that figure to $62 million in mid-July, and Nasdaq CEO Bob Greifeld called it "definitive" during a July 25 conference call with analysts.
Citigroup (C) and UBS (UBS) have come out swinging. In MORE
Maureen Farrell - Aug 23, 2012 12:33 PM ETPosted in: citadel, citigroup, FaceBook, initial public offering, IPO, knight, Knight Capital Group, Nasdaq, SEC, ubs -
Knight Capital surges 60% as trades return
Knight Capital Group's stock rallied nearly 60% Friday afternoon, after online brokerage firms TD Ameritrade (AMTD) and Scottrade said they'd resumed routing trades through Knight's system.
TD Ameritrade CEO Fred Tomczyk said the decision to resume trading came after "considerable review and discussion," adding that Knight has "long been a good and trusted partner."
Knight (KCG) was behind a series of bizarre moves in otherwise thinly traded stocks early Wednesday. For 45 MORE
Maureen Farrell - Aug 3, 2012 5:20 PM ET -
The Wall Street machine is broken
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.
Technology is a great thing until it runs amok. That's the plot line of scores of good (and bad) sci-fi novels and movies. But it's also the sad reality for investors.
The Knight Capital Group trading glitches MORE
Paul R. La Monica - Aug 2, 2012 12:12 PM ET -
Knight's costly trading glitch: $440 million
Knight Capital Group (KCG) said Thursday that it will face a $440 million loss for causing a glitch that affected trading activity in nearly 150 NYSE-listed stocks.
Knight said in a statement that it has closed out of all its positions related to the erroneous orders and removed the software that caused the problems from it systems.
Shares of Knight, which fell 33% Wednesday, plunged as much as 54% in early trading MORE
Maureen Farrell - Aug 2, 2012 10:13 AM ET -
Knight's bizarre trades rattle markets
Knight Capital Group (KCG) was behind a series of bizarre moves in otherwise thinly traded stocks early Wednesday.
Knight spokesperson Kara Fitzimmons acknowledged that "a technology issue" occurred in its market-making unit that affected how shares for some 150 NYSE-listed stocks were routed. "Knight notified its market-making clients this morning to route listed orders away," she said in a statement, adding that the company continues to investigate.
Knight's shares dropped more than MORE
Maureen Farrell - Aug 1, 2012 12:28 PM ET
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