Knight Capital Pressures Nasdaq Over Facebook Debacle


Knight Capital Pressures Nasdaq Over Facebook Debacle

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After our report yesterday about Knight Capital Group Inc. (NYSE:KCG)  considering legal recourse to recover its losses on the botched Facebook IPO from Nasdaq, we have more comments from Knight Capital chief Thomas Joyce, who has gained somewhat of a reputation for being the leading critic of the hapless exchange.

Though there may be some background here. Joyce and Nasdaq chief Robert Greifeld were once directors on each other’s boards but have stepped down long since. Knight was previously listed on the Nasdaq, but Joyce moved its listing to rival NYSE Euronext (NYSE:NYX) when Greifield tried to control dark pools some of which are run by Knight.

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After the Facebook Inc (NASDAQ:FB) debacle, Joyce has kept up the pressure on Nasdaq to resolve the disputes and pay compensation to the affected parties. Knight lost $34.5 million due to faulty trade execution on that fateful day. “We have been in reasonably consistent dialogue with Nasdaq,” Joyce said yesterday during the company’s earnings call. “We’re going to be all eyes and ears waiting to watch and read and hear about what they suggest in their filing.” Nasdaq is expected to soon put up its proposal for resolving the matter before the regulators, and is stated to be proposing an amount of $40 million for settlement, a far cry from the at least $100 million estimated to be lost.

In an interview to Bloomberg, Joyce is quoted as saying, “Their technology failed and then there were a series of decisions made after the technology failed that were unfortunate. Bob and that organization will learn from what happened that day and I have no doubt will improve upon it.”

Knight also said that Knight’s lawyers remain in touch with the exchange on the subject.

The foul-up also attracted criticism from Nasdaq competitor NYSE Euronext (NYX) who said it was a setback for the securities industry.

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Saul Griffith is an investor in stocks, commodities and forex, writing under a pen name. Saul has top accounting qualifications and extensive experience in industry and the financial markets. He also has an abiding interest in breaking news that could be a harbinger of new trends and give insight into an instrument’s potential for providing value, growth or yield.
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