Knight Capital Group's successor has agreed to pay $12 million to settle
The SEC faulted Knight Capital for a software glitch that caused the Jersey City, N.J., financial services firm to place millions of unintended trades within 45 minutes on Aug. 1, 2012.
The trading losses pushed Knight Capital to the edge of bankruptcy and underscored the market's vulnerability to software-driven trading mistakes. The SEC said Knight violated laws that require trading firms to have safeguards in place to prevent such mistakes.
"The market access rule is essential for protecting the markets, and Knight Capital's violations put both the firm and the markets at risk," said Andrew Ceresney, co-director of the SEC's enforcement division. "Given the rapid pace of trading in today's markets and the potential massive impact of control breakdowns, broker-dealers must be held to the high standards of compliance necessary for the safe and orderly operation of the markets."
Devastated by the losses, Knight Capital was acquired by Chicago-based Getco, creating KCG Holdings.