Wall Street's latest disaster is the trading firm Knight Capital (KCG),
which somehow managed to lose hundreds of millions of dollars in a half
hour last week from a "software glitch"--a capital loss that almost
destroyed it.
Knight has now received an emergency investment of $400 million from a group of investors including TD Ameritrade, Blackstone Group and Chicago-based Getgo. These new investors will own 70 percent of Knight Capital.
This injection will allow the firm to keep operating, but between last week's losses and the additional dilution from today's investment, Knight shareholders have been pretty much wiped out. The deal will more than triple the number of shares outstanding, massively diluting current shareholders' stake in the firm.
The stock is down 70 percent in the last five days.
"Clearly, we're not happy with how it played out," said Knight Capital CEO Tom Joyce on CNBC Monday morning, adding the firm got the best deal is could considering the circumstances.
Knight Capital, which accounts for 10 percent of equity trading volume, is currently investigating the mishap. Joyce said he'd support further rules and regulation after fully understanding what went wrong last week Thursday.
Read more: http://finance.yahoo.com/blogs/daily-ticker/knight-capital-implosion-latest-wall-street-alarm-bell-141201241.html
Knight has now received an emergency investment of $400 million from a group of investors including TD Ameritrade, Blackstone Group and Chicago-based Getgo. These new investors will own 70 percent of Knight Capital.
This injection will allow the firm to keep operating, but between last week's losses and the additional dilution from today's investment, Knight shareholders have been pretty much wiped out. The deal will more than triple the number of shares outstanding, massively diluting current shareholders' stake in the firm.
The stock is down 70 percent in the last five days.
"Clearly, we're not happy with how it played out," said Knight Capital CEO Tom Joyce on CNBC Monday morning, adding the firm got the best deal is could considering the circumstances.
Knight Capital, which accounts for 10 percent of equity trading volume, is currently investigating the mishap. Joyce said he'd support further rules and regulation after fully understanding what went wrong last week Thursday.
Read more: http://finance.yahoo.com/blogs/daily-ticker/knight-capital-implosion-latest-wall-street-alarm-bell-141201241.html
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