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Big losses from trading glitch send Knight Capital shares plunging

Knight Capital Group, a major brokerage, said it lost $440 million in a trading glitch that rattled the stock market and renewed concerns over computerized trading on Wall Street.

The Jersey City, N.J.-based firm said the pre-tax loss left its capital base “severely impacted.”

Knight pinned the technology malfunction on newly installed software that sent “numerous erroneous orders” into the stock market on Wednesday.

The brokerage said Thursday morning it removed the software from its systems and that none of its clients were affected.

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“Although the company’s capital base has been severely impacted, the company’s broker-dealer subsidiaries are in full compliance with their net capital requirements,” the firm said in a statement.

On Wednesday, Knight had redirected clients elsewhere while it reviewed the problem.

“Knight will continue its trading and market making activities at the commencement of trading today,” the firm said Thursday. “The company is actively pursuing its strategic and financing alternatives to strengthen its capital base.”

The New York Stock Exchange, where Knight’s erroneous trades were routed, identified irregular trading in 148 stocks shortly after the opening bell on Wednesday. The exchange wound up undoing some trades in six firms’ stocks.

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The U.S. Securities and Exchange Commission has been reviewing what went wrong and said it was “closely monitoring” the situation Wednesday.

KCG data by YCharts

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