Legal News

45 Minutes of Software Glitch: Knights Capital Group Loses $440 Million
Download PDF
1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading...

Just in two days, the shares of Knights Capital Group plunged by 80 percent as it suffered a $440-million trading loss brought on by a 45-minute software glitch. The biggest customers of the company, including Vanguard and Fidelity Investments have stopped routing orders through Knight fearing collapse of the company. According to James Koutoulas, head of an advocacy group for former customers of Pergrine Financial and MF Global, “They have about 48 hours to shore up confidence.”

Currently, industry sources report that Knight is actively seeking new funding. The company said it is “actively pursuing its strategic and financial alternatives” causing concerns that the firm may be sold or face bankruptcy.

Knight was among the leading market maker in U.S. stocks prior to its rapid decline. The problems occurred from the firm’s trading software that sent bogus and rapid trades into the market for 45 minutes on Wednesday. Forty-five minutes of buying inflated stocks that was sufficient to bring Knight to its knees.

  
What
Where


Knight’s recent catastrophe caused by software glitch, and Nasdaq’s botching of the Facebook IPO which was also related to failure of automated system, once again brings the focus back on the dependency of industries on new technology. The U.S. Securities and Exchange Commission said on Thursday that it would consider whether new measures are required to safeguard markets.

Devastating failures of fully automated systems that make predictions and purchases without human supervision are making us question anew about the extent to which software should be allowed to exclude human supervision.

However, advocates of fully automated trading systems say that the fault is not with the systems but in the lack of control and maintenance at individual firms. Though Knight blamed its technology breakdown on new software that routed erroneous orders to the NY Stock Exchange, it did not offer any explanation as to why traders did not react to the obvious errors and intervene to stop them.

Get JD Journal in Your Mail

Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!




SEC spokesman John Nester said on the issue, “We continue to closely review the events surrounding yesterday’s trading and discuss those events with other regulators as well as Knight Capital Group.”





 

RELEVANT JOBS

REAL ESTATE ATTORNEY

USA-PA-West Chester

SunEast Development LLC is a leading developer of utility-scale PV solar projects in the eastern U.S...

Apply now

Paralegal - Torts & Insurance Litigation

USA-FL-Fort Myers

Henderson Franklin is currently accepting resumes for skilled paralegals in our Torts and Insur...

Apply now

Law Clerk

USA-DC-Washington

C2 ALASKA, LLC Washington, DC   The Law Clerk II Journeyman- Division of Enforcem...

Apply now

Director of Administration

USA-VA-Arlington

Director of Administration (Communications/Litigation/Transactional Law Firm) Fletcher, Heald...

Apply now

BCG FEATURED JOB

Locations:

Keyword:



Search Now

Electrical Engineering, Computer Science/Engineering Associate Attorney

USA-IL-Chicago

Chicago office of a BCG Attorney Search Top Ranked Law Firm seeks electrical engineering, computer s...

Apply Now

Attorney

USA-FL-Jacksonville

Jacksonville office of a BCG Attorney Search Top Ranked Law Firm seeks an attorney with 4-20 years o...

Apply Now

General Liability Associate Attorney

USA-GA-Atlanta

Atlanta office of a BCG Attorney Search Top Ranked Law Firm seeks general liability associate attorn...

Apply Now

SEARCH IN ARCHIVE

To Top