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What’s Next for Knight Capital?

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  • Description

    FBN's Charlie Gasparino on what new investors are expecting from Knight Capital.

  • Duration 4:56
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I guess a couple weeks out of bailing out the troubled Knight securities the firm's new investors are bracing for possible regulatory action.

It further pressure on CEO Tom -- fox -- of course much like aspirin helps.

That might not.

It's good to let the dust settle before we go back to historians been two weeks since night -- -- last minute save.

New investors heavily diluted current -- those lots of problems at -- securities.

The stock price hasn't really -- that much it's it's not in the -- distressed area of two dollars a share I think we're we're told about a three dollar stock at this point.

They -- -- to a five whoa that's at that's down a little bit so that there's some bets that it's gonna go further here's what we know.

A least coming from the new crop of investors what they expect and I think its interest -- because usually the guys have put the money in now you know they.

They did they look at the worst case scenario this is what they're telling me OK people.

Now people close I -- with with the heads of these of the firms that are in the video of the investors here's what they're saying.

They say they really do expect civil charges against Knight securities and may -- spin it may be individuals there.

What -- -- civil charges be over there will be over and having potentially faulty compliant systems you know there was an SEC rule.

-- -- market access which it's very dubious.

Within night complied with that they would that would have established some trip wires so when they made the faulty trade members -- had to do with some sort of faulty trade someone hit the button who knows what we don't know -- -- the details yet.

But whatever market access the SEC rule that was passed about a year ago would have stopped that that would -- -- -- apparently this trip wires weren't there.

The new investors -- -- -- they expect something coming down the pike.

Based on that -- that will be is who knows crop may be a fine and you know they -- got to ask yourself how big the fine will be.

Using the FCC fines aren't that onerous but you know -- night.

Handle another twenty million dollar fine and then they settle -- talked about a top -- -- on top of that -- so this is something that's gonna play out maybe that's why the stock's down a little bit.

We should also -- tell that you know don't tell you that you know when they invested the money that Sunday afternoon where we -- -- working I was watching Dark Knight and you know email my sources in tweeting about this.

-- days they expected they were essentially told and they expected that that night would keep current management.

The -- meaning Tom -- the CEO -- -- for.

You know who knows how long but -- you know a period of time.

Because they think that those -- the guys would know how to run it okay.

Here's what also they're saying that the one flying -- -- into that scenario are these civil charges if these civil charges are very owners.

If they point to senior management -- not taking the exact doing the right steps.

To basically deal with with a trip wires with those compliant systems didn't comply with market access.

And other -- -- -- rules what they're saying this.

That could be the food the sort of did these the sort of instantly you need -- sort of spark.

That forces Tom Joyce to leave so that's what we have to worry about we have to look at this SEC investigation -- goes.

So investors are expecting something something along civil charges about not being prepared.

For these for these -- is for the for the school -- destroy the firm.

And let's face it wiped out like 700 million dollars in shareholder value and this is like.

-- something bad that occurred here I mean it's not just that they made a mistake yes it's great that the -- that the cap companies -- It's great that a firm like they can implode and does not have systemic impact where you know the rest of affirms full -- But investors lost a lot of money here and that's with the SEC -- so this is what we know right now.

Policy a fluid situation will be on -- is pricing any mention in the firm survive what is that mean in terms of the day to day operations is a business as usual that they get that software -- -- well you know that's a good question look at that stock price can we show that again it's it's it's up marginally today to book to 85.

-- out there it's it's going back down again has which walk me.

It's our story that's cause of this but there.

I do with the market is saying that right now is that you remember when they did the deal when they got the money.

From promote those investors and we remain solvent this the stock traded up about three bucks a share.

That's a good deal for anybody put -- because remember they bought convertible bonds at -- have an exercise price at a golf of these so.

You know they made money what that is seen is a couple things I think that saying that.

They expect a lot of those investors who exercise their right to convert and to start selling out because they don't want a part of this company.

It's probably also saying that -- business model.

Is been shaking dramatically that people are are not dealing with them this much and also probably -- Is that the rumors out there that you know the people at the formal looking for other jobs and they they'll likely to lose a lot of their personnel wise -- a lot of those guys get paid on stock.

You know you know be in generally cash bonuses are -- are you know you'll get everything in cash.

Will they be getting everything cash will they begin stock and we get stock -- -- up you know stock at.

Two -- a share I don't know I mean.

It's it's it's doesn't sound like and an operation that you know there are many questions with this firm clearly and that's what the market is saying right.

-- thanks okay thanks for that --

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