Knight Capital to Pay $12 Million Fine on Trading Violations

nytLogoOctober 16, 2013, 3:41 pm

On Wednesday, Knight Capital agreed to pay a $12 million fine to settle charges that it violated trading rules by failing to put adequate safeguards in place to prevent the barrage of erroneous stock orders.

Knight Capital, which was recently acquired by the high-frequency trading firm Getco for $1.4 billion, has neither admitted nor denied wrongdoing.

This is not Knight’s first run-in with regulators.  In 2002, Knight was fined $1.5million to settle charges of violations within the firm’s market-making and trading platform; violations that occurred between 1997-2001. In 2004, Knight reached a $79 million settlement of claims that it had overcharged customers ..”The Commission (SEC) issued an Order that found that Knight defrauded its institutional customers by extracting excessive profits out of its customers’ orders while failing to meet the firm’s duty to provide “best execution” to the institutions that placed those orders..”

Last year, Knight’s failure to manage its technology platform caused the firm to lose close to $500 million; Knight was since taken over by HF trading firm GETCO earlier this year.