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Knight Considering Bankruptcy, Looking At 363 Asset Sale

Tyler Durden's picture


This may be it. Via Fox News:


363 Asset sale? This is what we said earlier when we reported on the rumors of a sale to Virtu: "Will it happen? Maybe. Although we doubt it - why pay for equity value when one can pick up the functioning assets in a Chapter 363 asset sale which also sticks the creditors with all the crappy assets?" Sure enough. Sadly, what this means for the company 1,500 employees is that about 80% them will be out of a job due to an algo gone wild. And to then we have been warning about the impact of HFT for the past 3 years.

Perhaps now that people's livelihoods are about to destroyed even the porn-addicts at the SEC will finally take this matter seriously.


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Thu, 08/02/2012 - 16:25 | 2673845 Dr Benway
Dr Benway's picture

I'm supposed to feel sorry for the people who worked at Knight? Reaaaally?


The bigger problem is the billions places like these have stolen over the years.

Thu, 08/02/2012 - 16:29 | 2673878 JLee2027
JLee2027's picture

No more multi-million dollar Christmas bonus? No more drinking champagne toasts from a balconey while laughing at the Occupy protestors? What is the world coming to?

Thu, 08/02/2012 - 16:34 | 2673905 bdc63
bdc63's picture

They waited until after the market close to report this? .... huh ... wonder why they did that ....  ;)

Thu, 08/02/2012 - 16:51 | 2673978 spastic_colon
spastic_colon's picture

surely you are aware that the large banks are behind this also, eventually they will control the algo trading as well, partly by "attritioning" the smaller players.

Thu, 08/02/2012 - 16:52 | 2673985 SWRichmond
SWRichmond's picture

Can't they just do some repo 105's?

Thu, 08/02/2012 - 17:23 | 2674060 hedgeless_horseman
hedgeless_horseman's picture



At BanKnightofAmeriCountryWideMerriLynch we offer a broad portfolio of campaign finance solutions...

Thu, 08/02/2012 - 17:24 | 2674064 AldousHuxley
AldousHuxley's picture

Nothing like seeing money changers go bk.....have a good weekend everyone

Thu, 08/02/2012 - 19:01 | 2674285 Bananamerican
Bananamerican's picture

i heard KFC is hiring....the Bollinger's on me.

Thu, 08/02/2012 - 21:02 | 2674523 AldousHuxley
AldousHuxley's picture

fried chicken is depression proof business world wide.


Colonel Cluck was a freaking genius.


they can fry it and serve it to you cheaper than you what raw chicken costs at the market.



KFC first fast food in China. even communists can't resist.

On last supper, Jesus had fried chicken.

Thu, 08/02/2012 - 20:30 | 2674467 Normalcy Bias
Normalcy Bias's picture

...and Knight likely laments that 'if only liabilities were as easy to vaporize as assets, nowadays'...

Thu, 08/02/2012 - 17:04 | 2674014 cougar_w
cougar_w's picture

HFT is the only game they got left.

Sucks to be them, because they'll have to take money from each other now.

Thu, 08/02/2012 - 19:28 | 2674350 DaddyO
DaddyO's picture


Where is dic_in_the_box telling us how much money he made off Knight yesterday?


Fri, 08/03/2012 - 00:55 | 2674915 Freddie
Freddie's picture

Most individual investors have quit the rigged casino of Wall Street/3 card Monti as in Mario Monti.

Thu, 08/02/2012 - 19:11 | 2674293 Bananamerican
Bananamerican's picture

"surely you are aware that the large banks are behind this also, eventually they will control the algo trading as well, partly by "attritioning" the smaller players"

"suppose they threw a market..........and nobody came" ?

In a way, I enjoy this more than if the SEC or CFTC had been caught actually doing their (assumed) jobs.

I like the idea of these S.O.B.s taking themselves down in the age old ways of the worst of the human race...

through arrogance, hubris, short-sightedness and GREED

Thu, 08/02/2012 - 16:56 | 2673994 max2205
max2205's picture

Whores and hookers seeing revenue desimated

Price of pussy going down. So to speak

Thu, 08/02/2012 - 16:59 | 2674001 AldousHuxley
AldousHuxley's picture

Is there a place where all of this financial shenanigans are being recorded?



Lehman repo 105

fannie mae/freedie mac nationalization

bank bailouts

Madoff ponzi

Sanford ponzi

Facebook IPO
Flash Crashes

MF Global missing customer cash

Barclay, bank of england led Libor fixing

Knight Capital

Thu, 08/02/2012 - 17:03 | 2674011 MsCreant
MsCreant's picture


Thu, 08/02/2012 - 17:20 | 2674055 fuu
fuu's picture


Thu, 08/02/2012 - 20:32 | 2674471 veyron
veyron's picture

R. Allen Stanford

Fri, 08/03/2012 - 00:16 | 2674871 JohnKozac
JohnKozac's picture

"Investors hold $375 million of Knight convertible notes and can demand repayment if there’s a “fundamental change,” including a sale, according to a 10-K filing. The biggest owners of the notes are Goldman Sachs, Oaktree Capital Management, Invesco Ltd. and Citadel Advisors LLC, according to data compiled by Bloomberg. The bonds lost 16.125 cents to 67 cents on the dollar, sending the yield up to 20 percent."

Thu, 08/02/2012 - 16:35 | 2673908 Dr. Richard Head
Dr. Richard Head's picture

Hopefully some sort of equilibrium where true labor is valued accordingly and fictional fractional rehypothicated horseshit reverts to the true mean.

Push on my aggregrate demand string bankster bitchez.

Thu, 08/02/2012 - 16:46 | 2673960 MachoMan
MachoMan's picture

I guess we should start worshipping the machines then if labor is valued accordingly...

Thu, 08/02/2012 - 16:49 | 2673973 Dr. Richard Head
Dr. Richard Head's picture

All hail the co-located NYSE servers.  All hail the algos.  All hail Benny's Printing Press.

Thu, 08/02/2012 - 18:24 | 2674204 PMakoi
PMakoi's picture

All Halle Berry!

Thu, 08/02/2012 - 16:35 | 2673914 Buckaroo Banzai
Buckaroo Banzai's picture

Speaking of bankrupt, so is the story we're being fed about the Aurora shooting:

Thu, 08/02/2012 - 19:37 | 2674367 JLee2027
JLee2027's picture

Well he was arrested in Occupy San Diego right? Then they should have fingerprints. Sorry, but I think it's the same guy from the photos anyway.

Thu, 08/02/2012 - 19:52 | 2674399 Totentänzerlied
Totentänzerlied's picture

I thought the same thing when I saw the pics a week ago. Oh well.

Thu, 08/02/2012 - 16:46 | 2673963 YuropeanImbecille
YuropeanImbecille's picture

This is good for us westerners who work in IT. The latest software that caused this debacle was operated by Indian 'experts' that took over the code base.

So kcg saved a couple of hundred grand on replacing western coders with Indian 'experts' and this cost them the company :)

I do not understand how this expert system could invert the decisions, there could be an super easy explanation for this... And if any of you Indians read this please tell me if it was a back chaining check that took frame command?

Or did you invert a variable ?


Thu, 08/02/2012 - 17:06 | 2674018 AldousHuxley
AldousHuxley's picture

H1B is not just for IT anymore and those indians have been in US for a decade now, so they got greencards. and that's when they get laid off.

It looks like they stopped hiring even H1Bs starting 2008.

However, the salaries aren't too bad.


Director, Quantitative Trading              $160,000    2007-05-08
VICE PRESIDENT, PROGRAMMER/ANALYST         $140,000    2009-12-10
Manager, Software Research and Development     $150,000    2007-06-26



Thu, 08/02/2012 - 17:19 | 2674051 YuropeanImbecille
YuropeanImbecille's picture

I am sorry but those salaries are shit! A admin dude at a bank gets 125.000... For a real expert in expert systems you get a consultant that will take home at least 1,000,000 for a 6-9 month project.

I did 250,000 a year in my youth as a AVP... Caring for trading infrastructure.

If you read this and work for less than 200k in an trading environment you are a idiot and a fool!

Thu, 08/02/2012 - 17:34 | 2674095 AldousHuxley
AldousHuxley's picture

figures dont' include bonus


1099s get market rate which is typically x2~3 salary to cover bennies and taxes and sales (self employment TAX for being too good to work for corp)


well if you are a programmer in a trading environment, what can I say..... traders get the big pay in trading environment.


That's why Aleynikov was paid $400K per year by Goldman Sachs and still wanted out. (offered 1.2M)

Thu, 08/02/2012 - 17:46 | 2674123 YuropeanImbecille
YuropeanImbecille's picture

Well Aleynikov is a guy who is a real expert. Don't know him and have never met him.. But 400k for the work he did is ridiculous (and he realized that after some time) maybe he did not believe it could be done... I do not know.

I would have asked for 36,000,000 a year if I had the skills and opportunities he had.

But you are right the traders make the big money, and that is fine considering their faily short careers. But it is important to realize the value of your own work whatever you do. And if you build a kick ass expert system that outperforms others you do not settle for crumbs.

For the next gen systems coming online the price tag is closer to a quarter billion, therefore if you are great do not settle for less than millions.

Two systems are never identical, ask altavista or bing after google showed how it is done.

Thu, 08/02/2012 - 17:38 | 2674109 LongBalls
LongBalls's picture

Those employees were never working anyway. Digging a ditch is working. They were dusting off their monitors to look at the pretty colors.

Thu, 08/02/2012 - 16:51 | 2673981 tj3
tj3's picture

Fuck Knight Trading. They have frontrun my orders so many times, it ain't even funny.

Thu, 08/02/2012 - 17:31 | 2674086 Larry Dallas
Larry Dallas's picture

Should be an interesting scene in the Hamptons this weekend. Especially after the pink slips are given tomorrow afternoon.

Not saying the specialist model didn't have its flaws that are natural with greed and front running being one of them, but you never saw anyone of them blow up as spectacularly as this has.

Thu, 08/02/2012 - 19:20 | 2674335 banksterhater
banksterhater's picture

They're not employees, they are PARASITES! Fumigate them.

Thu, 08/02/2012 - 23:06 | 2674776 jonjon831983
jonjon831983's picture

Bah, hope you don't direct that to those lower level office people like janitors and secretaries who get less than the scraps.

Thu, 08/02/2012 - 16:26 | 2673852 AldousHuxley
AldousHuxley's picture


-4.36 (-62.82%)

After Hours: 2.17 -0.41 (-15.89%)


one short trader is getting lucky tonight!

Thu, 08/02/2012 - 16:28 | 2673870 mayhem_korner
mayhem_korner's picture



By "one short trader", do you mean (i) not you, (ii) an insider, or both?

Thu, 08/02/2012 - 16:34 | 2673907 AldousHuxley
AldousHuxley's picture
Short Interest (Shares Short): 6,784,200 Not one, but seems to be many % Owned by Insiders: 1.92% not many insiders either Stifel Nicolaus analyst who gave
Buy rating at $16
Thu, 08/02/2012 - 16:31 | 2673886 JLee2027
JLee2027's picture

Where is that guy who claimed he bought 100K shares at 2.33 earlier today? 

I'll bet he's crapping his pants now.

Thu, 08/02/2012 - 16:40 | 2673924 Dr. Richard Head
Dr. Richard Head's picture

Correction, it's called Making a Morgan.

Thu, 08/02/2012 - 16:45 | 2673958 AldousHuxley
AldousHuxley's picture

short covering is a buy

Thu, 08/02/2012 - 18:12 | 2674176 sessinpo
sessinpo's picture

And Slaughterer @ $2.30


"We bought 100,000 shares of KCG at $2.30."




Fri, 08/03/2012 - 01:01 | 2674924 Freddie
Freddie's picture

The Tyler's need to post the biggest holders of this dogshit stock.  My guess is Whitney Tilson or whatever his name is owns it.  Probably many hedge fund schmucks too. 

Thu, 08/02/2012 - 19:47 | 2674392 Haager
Haager's picture

Did someone notice that the stockprice already went south the day of the glitch, hours before that glitch occured?

Someone became rich by suicide-attack?

Thu, 08/02/2012 - 20:12 | 2674429 T-Silver
T-Silver's picture

Where is JPM in all of this?

Thu, 08/02/2012 - 22:52 | 2674757 Buck Johnson
Buck Johnson's picture

Got to wonder if those segregated accounts at Knight are fully funded.

Thu, 08/02/2012 - 16:22 | 2673823 NotApplicable
NotApplicable's picture

So... who's gonna get those customer accounts this time around?

Thu, 08/02/2012 - 16:24 | 2673838 Unprepared
Unprepared's picture

What customer accounts?

Thu, 08/02/2012 - 16:28 | 2673873 AldousHuxley
AldousHuxley's picture

National Bank of Greece is still around looking for customer deposits.

Thu, 08/02/2012 - 16:34 | 2673904 AcidRastaHead
AcidRastaHead's picture

Oh, that's the pile of millipennies over there.

Thu, 08/02/2012 - 16:22 | 2673825 malikai
malikai's picture

If the squid is in on the sale, I'll shit myself.

Thu, 08/02/2012 - 16:25 | 2673844 Papasmurf
Papasmurf's picture

Why would you assume less?

Thu, 08/02/2012 - 16:28 | 2673871 malikai
malikai's picture

I've been joking all day that it's them and the Morgue. If it turns out that way, it might just be too much for me.

Thu, 08/02/2012 - 19:06 | 2674295 Jay Gould Esq.
Jay Gould Esq.'s picture

"Fredo, I know it was you. You broke my heart. YOU BROKE MY HEART !"

Thu, 08/02/2012 - 16:33 | 2673900 Whatta
Whatta's picture

It was probably one of their computer guys doing the coding-gone-wild. Next we find out GS was short Knight.

Thu, 08/02/2012 - 16:37 | 2673921 bdc63
bdc63's picture

... while telling their muppets -- I mean "clients" -- that they have a 'strong buy' on Knight ...

Thu, 08/02/2012 - 16:59 | 2674002 max2205
max2205's picture

No shorts available for my tries today. Little people can't naked short. GS WAS I am sure

Thu, 08/02/2012 - 16:23 | 2673829 SHEEPFUKKER

You blinked and you missed this story. But then again, the story keep repeating itself over and over again. 

Thu, 08/02/2012 - 16:23 | 2673831 thren
thren's picture

computers win!


Thu, 08/02/2012 - 16:42 | 2673943 earleflorida
earleflorida's picture

algo's are people too...

Thu, 08/02/2012 - 17:16 | 2674045 Money 4 Nothing
Money 4 Nothing's picture

Corporations are people you dumb ass.. Sheesh. /sarc

Thu, 08/02/2012 - 16:24 | 2673835 Bay of Pigs
Bay of Pigs's picture

The pace seems to be quickening

Thu, 08/02/2012 - 16:24 | 2673836 FL_Conservative
FL_Conservative's picture

That's what happens when your business relies on fucking algos.  Haven't they seen Terminator 3? 

Thu, 08/02/2012 - 16:26 | 2673851 Unprepared
Unprepared's picture

That what happens when your business relies on algos written by a third party.

Thu, 08/02/2012 - 16:31 | 2673890 john39
john39's picture

seems like a hunter/killer algo lurking out there... who gets it next?

Thu, 08/02/2012 - 16:40 | 2673933 reload
reload's picture

Its one thing to rely on algos, but to rely on one written by a third party? nuts. How many firms are running third party bots, how will they be sure theirs did not come with the `on a certain date, you lift the offer and hit the bid` feature? Perhaps these appalling rebate collecting scams will start to be swiched off at last - we can but hope.

Thu, 08/02/2012 - 18:05 | 2674163 MachoMan
MachoMan's picture

Reminds me of the great white sharks fleeing when one of them gets killed by a pack of killer whales...

In regard to your answer concerning the outcome of a Great White versus Killer Whale battle, all known verifiable evidence supports the Killer Whale as the winner in almost all circumstances. In her book, The Devil's Teeth Susan Casey details the several weeks she spent on the Farallone Islands with Great White Shark researchers Peter Pyle and Scot Anderson. Pyle and Anderson have studied the predatory habits of great white sharks for over 15 years with the Farallone White Shark Project. A documentary on their work was released by the BBC and titled the Great White Shark. I own it and it's superb. They report that when the Killer Whales show up at the Farallones and kill one of the great white sharks, all of the other white sharks leave the area at high speed. How the Great Whites know when the killer whales make a kill is unknown. They also report that Killer Whales actively hunt great whites and they know exactly how to capture and kill them. On page 184 of the hard cover edition of The Devil's Teeth they report that on 10/4/1997 two maurauding Orcas (Killer Whales) attacked and killed a white shark by flipping the shark on its back and holding it until it drowned. Then they ate him in front of a boatload of tourists. Immediately after the kill all of the great white sharks at the Farallones vanished. It happened again on 11/19/2000. But this time many of the white sharks were tagged with satellite tracking devices. Immediately after the attack the great whites left the islands for several days until the Orcas left. When push comes to shove, it seems that, at least in these instances, it's no contest; brains, blubber and size over the mean teeth machine.


How many sharks have to get killed before they all leave?

Thu, 08/02/2012 - 19:44 | 2674389 JLee2027
JLee2027's picture

So JAWS was crap? They could have just dropped a couple Orca's in the water and had a beer and a smoke. Sheesh what a joy killer you are.

Fri, 08/03/2012 - 01:12 | 2674939 Freddie
Freddie's picture

Reminds me of hippos in Africa.  They just like to be left alone but when other animals f*** with hippos - they pay for it.  Orcas are tough and smart mo fo's.

Thu, 08/02/2012 - 16:24 | 2673837 FishHockers
FishHockers's picture

Calamari, Red or White.......................

Thu, 08/02/2012 - 17:14 | 2674038 Money 4 Nothing
Money 4 Nothing's picture

Red please, to match the Muppets tape color for the day...

Thu, 08/02/2012 - 16:24 | 2673839 Meesohaawnee
Meesohaawnee's picture

i like that "considering" .. didnt mother fucker global "consider" being in business the next day?

Thu, 08/02/2012 - 16:24 | 2673841 centerline
centerline's picture

SEC is just the clean-up crew.

Thu, 08/02/2012 - 16:25 | 2673847 RockyRacoon
RockyRacoon's picture

"Perhaps now that people's livelihoods are about to destroyed even the porn-addicts at the SEC will finally take this matter seriously."

Nah.  Not a chance.  Not until THEIR employment is at risk.

Thu, 08/02/2012 - 16:36 | 2673917 Bay of Pigs
Bay of Pigs's picture


How's that silver "investigation" coming along anyway (4 years)? Tin Hat my ass...the whole shithouse is going up in flames.

Thu, 08/02/2012 - 18:01 | 2674155 MsCreant
MsCreant's picture

See my reply below, saw the same issue you did. Only difference is I don't think anything can be done about it.

Thu, 08/02/2012 - 20:18 | 2674443 ForTheWorld
ForTheWorld's picture

It's not just the SEC... It's also the Pentagon:

Thu, 08/02/2012 - 16:26 | 2673850 Dr. Richard Head
Dr. Richard Head's picture

Actually, the SEC porn watching habits have slid over to the Missle Defense Agency like Ebola in Uganda.

Thu, 08/02/2012 - 16:26 | 2673854 Meesohaawnee
Meesohaawnee's picture

im sure Maria B was chiming that all is good cause "we finished off the lows"

Thu, 08/02/2012 - 17:12 | 2674036 Money 4 Nothing
Money 4 Nothing's picture

Well thank God for that!

Thu, 08/02/2012 - 18:14 | 2674180 sessinpo
sessinpo's picture

I think she says that every time she gets off her knees from giving a BJ.

Fri, 08/03/2012 - 05:26 | 2675068 Disenchanted
Disenchanted's picture



If that's the case I guess she's graduated from 'money ho' to full on shiksa cum dumpster...I wonder how many "Dirty Gersteins" she gets in a day?


Congrats Maria B. I bet your Daddy's proud.

Thu, 08/02/2012 - 16:26 | 2673855 mayhem_korner
mayhem_korner's picture



I think we need to redefine the term "assets."  The difference between what the world's debt is collateralized with and the sum total of things that are actually valuable is a number that has about nine commas...

Thu, 08/02/2012 - 16:28 | 2673863 debtor of last ...
debtor of last resort's picture

Fat hft finger in your ....

Thu, 08/02/2012 - 16:28 | 2673864 I Am Not a Copp...
I Am Not a Copper Top's picture

Nothing will come of this.  As usual.

Thu, 08/02/2012 - 16:28 | 2673865 Dr. Engali
Dr. Engali's picture

I wonder how The Axe is feeing after this post...   2673538  ? Or sessinpo after this post 2673688 ?

Thu, 08/02/2012 - 16:30 | 2673887 homersimpson
homersimpson's picture

Probably the same way after I drink too many Duff beers.

Thu, 08/02/2012 - 18:27 | 2674192 sessinpo
sessinpo's picture

How should I feel? I don't post to feel. My post was in reply to The Axe who made the comment "group think"  My post was to suggest that that his thought  was also group think, the thought that buying the dip and that Wall Street and Nite Partners would save the day, so he bought 30,000 shares.


If I were an asshole, which I am, I could say I feel vindicated. But I really hate to see others lose money in this BS world. They should know better. So how do you feel? Maybe I could say another decent call on my part but I didn't really call anything. It was really a post on fallacy of thought. But I guess I am glad I never bought their stock which isn't really glad because its like a tree falling in the forest when I'm not around. I never heard it and it didn't effect me.

Let me know if that fallen tree catches fire though, a forest fire effects many.

Thu, 08/02/2012 - 19:25 | 2674344 Dr. Engali
Dr. Engali's picture

My apologies. I read that as supporting The Axe's assertion that Tyler didn't know what he is talking about. I was wrong and I apologize.

Fri, 08/03/2012 - 09:04 | 2675398 sessinpo
sessinpo's picture

No problem and no apologies needed. Actually I thought you were suggesting I rub in toward Axle which isn't worth my time.

I have made some calls. Most fairly good. Others, I've had my ass handed to me.

Anyway, after the shannigans with MFG and PFG, why would any sane person buy into Knight? Outside of my 401k, which I consider throw away money and I hardly pay attention to, I am very suspect and cautious with any account. Let me make this clear for everyone, bullish or bearish.

"If a financial firm (brokerage, insurance, banking, etc) gets into financial trouble, your supposed segreggated account is in trouble. Firms in trouble almost automatically suspend withdrawals and closing of accounts. The rule of law has been destroyed in this country. It probably goes back further but the most prominent incident was the GM bailout where bond holders got screwed. Nothing is sacred anymore, no law or contract. This is part of the downfall of our society, a corrupt state of both bankers and politicians." Sessinpo


For this very reason, you will find me posting political crap that is mostly against liberalism and for conservatism or modern day libertarianism and I know it pisses some off. But I really don't care. I don't spend to much time here but it is one of the few sites I frequent because I do think TD brings news stories of value not being covered by the MSM. Keep an eye out, I'll make a few calls here and there. I'm flat right now after predicting the upside gap filling on the NYSE just before it happened.

Thu, 08/02/2012 - 16:28 | 2673867 disabledvet
disabledvet's picture

YOU MEAN THE POWERS THAT BE HAVN'T BEEN LISTENING? REALLY? THE PHUCKTARDS LIKE TO WATCH DO THEY? HOW PHUCKING ORIGINAL! Only a WILLFUL idiot couldn't see this coming. I mean "WHEN IT COMES TO MONEY PEOPLE PREFER THE TRUTH?" That's the FIRST thing the puckers kill. Shall we throw the baby out with the bath water then? I say GO FOR IT.

Thu, 08/02/2012 - 16:29 | 2673869 Cursive
Cursive's picture


Sadly, what this means for the company 1,500 employees is that about 80% them will be out of a job due to an algo gone wild.

Civilizations are rarely able to grasp the indigenious practices which bring about a societal decline.

Thu, 08/02/2012 - 16:39 | 2673930 bdc63
bdc63's picture

there's always a silver lining ... for instance, I bet all those employees were able to get into the FB IPO for the sweet price of 39 bucks ....

Thu, 08/02/2012 - 16:32 | 2673876 Joshua_D
Joshua_D's picture

"We regret to inform you that we have to let you go due to a computer error."

- Human Resources








Worst. Bankruptcy. Ever.

Thu, 08/02/2012 - 16:33 | 2673901 Bunga Bunga
Bunga Bunga's picture

"Your job was just a volatile variable in our algos anyway."


Thu, 08/02/2012 - 16:29 | 2673879 Neethgie
Neethgie's picture

im amazed how stupid people are, algo's have no capacity for independant thought, people entrust a machine to be in a market, which cant think for itself, how else was this ever gonna end?  all it gets is bid/ask it doesnt understand that its a bit irrational to buy 8*100 shares a second how could it? yet people think its fine to let that loose on the market..

heres the kicker, if that happened on accident, imagine all the times a hft algo has been let loose to deliberately bring a stock price down, during periods of instability ie 2008..

Thu, 08/02/2012 - 16:30 | 2673880 EverythingEviL
EverythingEviL's picture

Let them by one

Thu, 08/02/2012 - 16:30 | 2673881 michigan independant
michigan independant's picture

Whoever controls the image and information of the past determines what and how future generations will think; whoever controls the information and images of the present determines how those same people will view the past.” “He who controls the past commands the future. He who commands the future conquers the past." —George Orwell

Thu, 08/02/2012 - 16:31 | 2673883 Paul Atreides
Paul Atreides's picture

This whole thing just stinks....



  • The day before you have the massive e mini dump (related?/unrelated?).
  • The day the Algo goes haywire not for 10 seconds but for 30 minutes, absolutely impossible someone wasn't monitoring it or alarm bells didn't go off...willing to bet it was staged.
  • Knight loses 400 million in the ensuing shitshorm.


  • Who are knights creditors?
  • Who does Kenny Pasternak's have contact with in the financial industry?
  • Does Kenny Paternak have dealings with Goldman Sachs/JP Morgan?
  • Who benefited from the algo fuckup?
  • Who was on the opposite side of those trades?




Thu, 08/02/2012 - 16:32 | 2673897 Wakanda
Wakanda's picture

Did someone hack Knight's code?

Thu, 08/02/2012 - 16:37 | 2673923 JLee2027
JLee2027's picture


Thu, 08/02/2012 - 17:16 | 2674044 cougar_w
cougar_w's picture


Thu, 08/02/2012 - 17:30 | 2674081 Pancho Villa
Pancho Villa's picture

Some programmer probably typed in a minus sign where a plus sign was actually needed.

Thu, 08/02/2012 - 17:59 | 2674148 MsCreant
MsCreant's picture

Wadell and Reed, those fat fingered fuckers!

Fri, 08/03/2012 - 04:51 | 2675056 dvsteenk
dvsteenk's picture

you think they work their code while trading? no way

Thu, 08/02/2012 - 16:33 | 2673899 john39
john39's picture

much more to this story... agreed...  money is getting vaporized left and right now.  no new QE to feed the beast?  the beast is very hungry...

Thu, 08/02/2012 - 16:36 | 2673919 Jlmadyson
Jlmadyson's picture

All in a week with no central bank printing.

It's too easy.

Thu, 08/02/2012 - 16:46 | 2673962 malikai
malikai's picture

Twist. ZIRP all over the place. Market rates killing others. It's happening despite..

Thu, 08/02/2012 - 16:42 | 2673940 salami_tsunami
salami_tsunami's picture

I remember the e-mini dump tyler pointed out the night before. It was like a) someone was testing it b) it got activated before the market opened, and someone let it off early by accident.

were only NYSE stocks affected?



Thu, 08/02/2012 - 16:44 | 2673952 Brother Sebastian
Brother Sebastian's picture

How do we know it was an "algo fuckup"?  Because Knight's top guy said so?  Supposing it was a legitimate trade to front-run the Fed's non-decision on Wednesday.  And supposing someone (like the Fed's trading desk or Goldman's/JP Morgan's  HFT computers) immediately spotted the trade and countered it...very successfully.  Sure looked that way to me as I watched the after-hour's action.  Knight was neutered.   

Thu, 08/02/2012 - 16:48 | 2673971 salami_tsunami
salami_tsunami's picture

by blasting Radioshack's stock up fifty cents???

I don't think so. Unless radioshack is about to release anti-gravity boots.

Thu, 08/02/2012 - 17:17 | 2674046 taraxias
taraxias's picture

Post of the day.

This was no algo glitch Tylers, wake the fuck up.

Follow the money to get your answers.

Thu, 08/02/2012 - 20:10 | 2674427 gookempucky
gookempucky's picture

Dont forget last year--wether its KGC or not--they are all the same connected matrix.

Thu, 08/02/2012 - 16:31 | 2673889 Atlantis Consigliore
Atlantis Consigliore's picture     its all safe seg funds;  ANYBODY UP FOR ANOTHER CONGRESS HEARING???

Thu, 08/02/2012 - 18:03 | 2674159 Karl von Bahnhof
Karl von Bahnhof's picture

There will be a damn long line soon for the Congress hearings...

Thu, 08/02/2012 - 16:32 | 2673896 Henry Rearden
Henry Rearden's picture

This doesn't make any sense to me.  How could knight allow this shitty algo onto the floor to begin with?  I mean it litterally buys the offer and sells the bid.

In the past, I've worked at firms with algos.  When one of them goes haywire, they cut it immediately.  And any code would be looked over by multiple people before putting it out on an exchange.  This is just too basic of a fuck up for it to not be a part of something larger.  Knight cannot possible be that stupid. 

Did they get hacked?  Was it an inside job?  Where they trying to blow out instead of facing something worse? 

It doesn't add up to me.

Thu, 08/02/2012 - 16:35 | 2673909 Neethgie
Neethgie's picture

the last option seems most fitting, if your accounts are all fcked up, then an algo goes wild causing untold losses, then the holes in your books are easily plugged, weird thing is how much bigger the losses are than the estimated losses.

Thu, 08/02/2012 - 16:38 | 2673929 Papasmurf
Papasmurf's picture

It's just another fraud scheme.  The participants are safe, so don't worry.

Thu, 08/02/2012 - 16:42 | 2673939 bdc63
bdc63's picture

"Were they trying to blow out instead of facing something worse?"

Ding! Ding! Ding!  We have a winner.

Thu, 08/02/2012 - 18:22 | 2674199 seek
seek's picture

Yep... looking at their balance sheet, this should be incredibly painful, but not company-terminating to them, yet in <24 hours they're talking about throwing in the towel.

This is the bank robbers setting the getaway car on fire to burn the evidence.

Thu, 08/02/2012 - 20:43 | 2674481 Henry Rearden
Henry Rearden's picture

This is such a good point.  The numbers don't add up.  The "actual" losses are so much higher than the estimated loses.

This is a smokescreen. 

Thu, 08/02/2012 - 18:37 | 2674228 PMakoi
PMakoi's picture

100 share trades by the hundreds, and faster than you can blink an eye.  Why? Probably cuz sometimes crime does pay.  Didn't this time.

Fri, 08/03/2012 - 01:21 | 2674948 Freddie
Freddie's picture

Malicious code that did the reverse of what it should do?  A Goldman/JP Morgue stuxent?  When you have high frequency trading - things can go bad really fast. 

Buffett,Soros, Rahm, O, Goldman, the Morgue and their cronies took a lot of competitors out in 2008 including McLame during that summer.   Lehman and Bear never knew what hit them.


Thu, 08/02/2012 - 16:35 | 2673913 mayhem_korner
mayhem_korner's picture



One-zero-zero, one-zero-zero, one S-O-S.

Replays each of the days, a hundred years of routines

Bows its head and prays to the mother of all Machines...

(The Body Electric, N. Peart)

Thu, 08/02/2012 - 16:35 | 2673916 DeFeralCat
DeFeralCat's picture

Maybe the bot went nuts when HR told him that his new health care plan -with a 50 dollar co-pay -was the Geek Squad?

Thu, 08/02/2012 - 16:37 | 2673922 salami_tsunami
salami_tsunami's picture

I'm betting a programmer put a conditional branch in the ALGO that routinely checked for him on the payroll by employee number. When his employee number showed he was no longer working with? the the firm, this alternate "self destruct" execution branch took over. He purchased significant, market-contrary positions in all the affected stocks, and is now sitting pretty in his private jet on the way to Switzerland


even if it's not true, I'm making the movie

Thu, 08/02/2012 - 17:22 | 2674059 cougar_w
cougar_w's picture

That's about as good a theory as any other I've seen.

Try this variation: A thrid party wrote this app for Knight, who either later stiffed them on the fee or didn't renew the "support contract". So some server phones home as usual, this time gets the command to kill, and unwinds itself. Since Knight never had access to the source code and probably doesn't even do their own IT (and might not host the server in the first place) it takes them 30 minutes to notice there was a problem, pinpoint the problem, and turn off the machine.

I'll settle for 10% of the screenplay royalties.

Thu, 08/02/2012 - 18:06 | 2674164 Karl von Bahnhof
Karl von Bahnhof's picture

Outsourcing is good for the bottom line.

Thu, 08/02/2012 - 21:49 | 2674626 Umh
Umh's picture

I know the company getting the work likes it.

Fri, 08/03/2012 - 01:31 | 2674960 Freddie
Freddie's picture

I had a friend who worked at the JP Morgue.   The Indians used to FU the code overnight in Mumbai/Bombay whatever.  They would call his home at 3 am so he could fix their FU and curried spaghetti code.  He quit are a short stint. 

Just like ET, Knight's software phoned home, which is probably 200 West Street in Manhattan.

Thu, 08/02/2012 - 16:41 | 2673935 Joebloinvestor
Joebloinvestor's picture

If it was a "hack job" the NYSE would have cancelled all the trades.

They would never admit to their computers being hacked and being able to cause this.

I always thought market making was computer related, not computer controlled!


Thu, 08/02/2012 - 16:46 | 2673961 salami_tsunami
salami_tsunami's picture

They clearly couldn't turn it off because of the volume and speed. nobody knew who was doing it. there were many other traders (humans) also putting in bids and sells as they reacted to the weird swings. There is no way they can cancel the trade, knight is obviously going to eat it. Whoever planned this probably knew that. May have set up their own algos to disguise massive purchases well before this timebomb went off, and already cashed out...

Thu, 08/02/2012 - 18:09 | 2674172 TraderTimm
TraderTimm's picture

I disagree.

If you run a firm that is processing millions in trades, you better have your infrastructure NAILED DOWN to the last server RACK.

The moment the red phone rings, IT should be able to tell you the switch, port, ip address of the offending box - and by the way, we killed the process sir, all is well - post-mortem in 30 minutes.

That is the way it is supposed to be done, not fiddling around like a bunch of keystone cops trying to pile into a wagon.


Thu, 08/02/2012 - 20:00 | 2674413 ForTheWorld
ForTheWorld's picture

That's the way it's supposed to be done. However, when was the last time you worked with a company that was that pedantic about their IT infrastructure? Most IT managers don't give a crap about that kind of stuff.

Thu, 08/02/2012 - 20:16 | 2674441 Umh
Umh's picture

And they don't know or want to know about their infrastructure. I really do wonder what kind of test environment was used. It seems like the first thing cut from an IT budget is testing.

Fri, 08/03/2012 - 01:43 | 2674968 Freddie
Freddie's picture

I had a friend who worked at AIG, Lehman, Merrill/BAC and maybe Bear plus a few others.  He said the IT and legacy code was pretty bad.  EVerything in NYC in these grunt areas is covering each others ass.  

Knight was probably better because this stuff was mission critical.  The question is always - who benefits.   The software had a worm or something that benefited a competitor.  Who has Russian contract programmers thrown in jail by Uncle Sam where they are pretty much dumped there with no bail?  The vampire squid?

Thu, 08/02/2012 - 16:45 | 2673936 delacroix
delacroix's picture


Thu, 08/02/2012 - 16:43 | 2673947 Gypsyducks
Gypsyducks's picture

Where the Fuck is Jon Corzine?

Thu, 08/02/2012 - 16:46 | 2673966 mayhem_korner
mayhem_korner's picture



Good book title, there Gypsy.

Thu, 08/02/2012 - 17:06 | 2674017 Money 4 Nothing
Money 4 Nothing's picture

Who is John Galt?

Thu, 08/02/2012 - 16:43 | 2673948 BalanceOrBust
BalanceOrBust's picture

The last words of the algo...

"Daisy, daisy, give me your answer, do. 

I'm half crazy, all for the love of you.

It won't be a stylish marriage.

I can't afford a carriage.

But you'll look sweet upon the seat

Of a bicycle built for two."

[Now the pod bay doors open]. 

Thu, 08/02/2012 - 16:46 | 2673957 Benjamin Glutton
Benjamin Glutton's picture

word is the their own computer executed them by conducting several months of pre-programmed orders in 30 minutes!



Thu, 08/02/2012 - 16:45 | 2673959 alien-IQ
alien-IQ's picture

Scottrade also jumped ship. No longer using Knight for equity execution. (and with Knight...execution is the operative word).

Thu, 08/02/2012 - 16:48 | 2673969 MarsInScorpio
MarsInScorpio's picture

It is one thing to lose your job because of poor decisions by humans; while we don't have any control, we at least feel that there is a rationale that we can understand, even if we cannot control it.


But to lose your job because some inanimate object went haywire, and then we have to suffer the consequences of a machine . . . that stirs an entirely different set of emotions.


I wouldn't want to be the programmer for that firm; I expect there is a real chance he or she will suffer physical violence for losing control of their program.


Same for anyone in IT, and especially the CIO, who oversees the operation, and will be the target of rage by the newly unemployed.


No excuses, or more likely smart-fanny quips from the wise-mouthed IT types, will be acceptable. In fact, if the IT types have enough brains to get out of a rainstorm, they will disappear and stay as far as possible away from the rest of the employees.


The bigger picture here is that the entire game is on a razor's edge, with a mere cough from a program being all that's needed to crash the game. The entire system lives - or dies - by the proper functioning of machines we all know are famous for not functioning properly.


What a fool's paradise we are building.


But there is one small consolation: the programs don't know, or care, about the elite status of those it destroys. The Ultra-Rich are just as likely to suffer death by digit as is anyone else.


Yes, a small consolation. But hardly enough to keep an unsteady employee on the verge of snapping from focusing his or her rage on the humans who created the monster that destroyed his, or her, life.


And actually, if those who profess we humans are merely highly sophisticated computers are correct, isn't there a certain justice in seeing one "computer" terminate another because the object of wrath was the cause of the computer disaster in the first place . . . . ?


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