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Final Berserk Algo Bill To Knight - $440 Million; Stock Implodes

Tyler Durden's picture




 

While JPMorgan thought it was $170mm, we said last night the number was notably higher - and sure enough, via Bloomberg:

  • *KNIGHT SAYS TRADING OUT OF POSITION YIELDED $440M PRETAX LOSS
  • *KNIGHT SEEKS OPTIONS TO BOOST 'SEVERELY' HURT CAPITAL POSITION
  • *KNIGHT CAPITAL PURSUING STRATEGIC, FINANCING ALTERNATIVES

KCG is down another 50% this morning to $3.45! And here is what we explicitly warned yesterday: "In  other words, with  Knight losing about $300 million in market cap today,  investors are  speculating that the net loss to the firm will be just  that as it has  to foot the bill. Considering the volume and breadth of  the impaired  universe, this will likely be very big underestimation of  just what the  final bill will be to Knight." Sure enough...

Knight Capital Group Provides Update Regarding August 1st Disruption To Routing In NYSE-listed Securities

PR Newswire

JERSEY CITY, N.J., Aug. 2, 2012

JERSEY CITY, N.J., Aug. 2, 2012 /PRNewswire/ -- Knight Capital Group, Inc. (NYSE Euronext: KCG) today provided an update on the August 1, 2012 disruption to routing in NYSE-listed securities.

As previously disclosed, Knight experienced a technology issue at the open of trading at the NYSE yesterday, August 1st. This issue was related to Knight's installation of trading software and resulted in Knight sending numerous erroneous orders in NYSE-listed securities into the market. This software has been removed from the company's systems.

 

Clients were not negatively affected by the erroneous orders, and the software issue was limited to the routing of certain listed stocks to NYSE.

 

Knight has traded out of its entire erroneous trade position, which has resulted in a realized pre-tax loss of approximately $440 million. 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. Knight will continue its trading and market making activities at the commencement of trading today. The company is actively pursuing its strategic and financing alternatives to strengthen its capital base.

 

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Thu, 08/02/2012 - 08:23 | 2671509 LULZBank
LULZBank's picture

KCG - kamikaze Capital Group Bitchezz!!!

Thu, 08/02/2012 - 08:24 | 2671513 GetZeeGold
GetZeeGold's picture

 

 

Oh come on.....even Muppets get mulligans.

 

Thu, 08/02/2012 - 08:27 | 2671532 wang (not verified)
Thu, 08/02/2012 - 08:29 | 2671543 GetZeeGold
GetZeeGold's picture

 

 

Go on without me.....let me know what happens.

 

Thu, 08/02/2012 - 08:37 | 2671554 BaBaBouy
BaBaBouy's picture

Fucking Out Of Control CASINO ???

WHERE Are the Fecking Regulators ???

Thu, 08/02/2012 - 08:41 | 2671606 tocointhephrase
tocointhephrase's picture

MDB, Robo? Come on make me laugh...one sec.....MUWHAHAHAHAHAHAAAA

Thu, 08/02/2012 - 08:52 | 2671656 veyron
veyron's picture

Down  nearly 60%:

2.82 -4.12 (-59.37%)

Thu, 08/02/2012 - 09:02 | 2671716 bdc63
bdc63's picture

what a knightmare

Thu, 08/02/2012 - 09:11 | 2671758 whstlblwr
whstlblwr's picture

ZH has the best financial reporting on the web. But if you do a Google search for Knight Capital, try to find ZH. What else is Google blacking out? Fuck you Google.

Thu, 08/02/2012 - 09:44 | 2671928 Thomas
Thomas's picture

Knight has lost 60% of its market cap. As ET would say, ouuuuuuch.

Thu, 08/02/2012 - 10:01 | 2672011 Manthong
Manthong's picture

He who lives by the algo, dies by the algo.

Who’s next?

Thu, 08/02/2012 - 10:51 | 2672227 Bananamerican
Bananamerican's picture

"There has been a disturbance in the Casino..."

knighty night niggaz!

Thu, 08/02/2012 - 10:40 | 2672193 Born-Again Bankster
Born-Again Bankster's picture

Those KCG puts are up 18x since I bought them after watching that damn ZH video with those guys saying, "whoever is doing this is losing hundreds of millions of dollars". Thanks guys...fahking awesome.

Thu, 08/02/2012 - 11:46 | 2672464 KowPie
KowPie's picture

@whstlblwr: ...try to find ZH...

 

...the bottom of the 5th page of search returns:

"

The Dark Pool Knight Capital Plummets | ZeroHedge www.zerohedge.com/news/dark-pool-knight-falls

1 day ago – Forget Bane, Knight is going dark:*KNIGHT CAPITAL EXPERIENCING DELAY IN PROCESSING STOCK ORDERS*KNIGHT CITES ...

"

Thu, 08/02/2012 - 09:08 | 2671741 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

Fucking Out Of Control CASINO ???

WHERE Are the Fecking Regulators ???

They are investigating bureaucratmidgettrannygoatsex.com quite thoroughly.

Thu, 08/02/2012 - 10:00 | 2672010 Buckaroo Banzai
Buckaroo Banzai's picture

The regulators are too busy raiding raw milk suppliers. Now THAT'S fraud!

Thu, 08/02/2012 - 10:18 | 2672091 Tijuana Donkey Show
Tijuana Donkey Show's picture

Can't have people eating something that might improve their health and doesn't come in a chargable pill form. We also need to crackdown on medical marijuana, as it might challenge some other pills, even if people in a "democracy" "voted" for it in an open election. America is big on only offering two choices on an issue: big agricuture or starve, pills or death, republican or democrat. 

 

P.S. Raw milk is AWESOME! Get some.

Thu, 08/02/2012 - 08:50 | 2671646 max2205
max2205's picture

China hacked into Knight and well the rest is history....

Thu, 08/02/2012 - 09:00 | 2671710 g speed
g speed's picture

not---IT guys watching porn for 45 mins and not watching the tape---lol

Thu, 08/02/2012 - 11:07 | 2672297 Umh
Umh's picture

Front running routine choked.

Thu, 08/02/2012 - 09:07 | 2671740 ToNYC
ToNYC's picture

V. (Vlad the Virtual) Lenin was spot on about given enough digital rope that Capitalism (divorced from Socialism completely) will invent algos and stuxnet themselves.

Thu, 08/02/2012 - 09:26 | 2671822 DeadFred
DeadFred's picture

I believe he said "The Capitalists will sell us the Cat5e cable with which we will hang them"

Thu, 08/02/2012 - 08:56 | 2671676 RiverRoad
RiverRoad's picture

This had nothing to do I suppose with the coincidentally kaput cyber bill in Congress?

Thu, 08/02/2012 - 09:41 | 2671856 phalfa5
phalfa5's picture

In A.D. 2012

War was begining

CEO: What Happen ?

IT Head: Somebody set us up the bomb.

www.youtube.com/watch?v=qltugh-fFgg

Thu, 08/02/2012 - 08:45 | 2671627 I Am Not a Copp...
I Am Not a Copper Top's picture

BWAAAAAAAAHAHAHAHAHAHAHAHAHAHAHAHAHA!!!!!!!!  Serves the bastards right.  Chalk one up for the humans against Skynet.  John Connor will teach us how to smash those metal motherfuckers!!!!!!

Thu, 08/02/2012 - 08:53 | 2671660 orangedrinkandchips
orangedrinkandchips's picture

"and were gonna smomke an ounce to that....G's up, Knights down...."

Thu, 08/02/2012 - 08:58 | 2671695 spankthebernank
spankthebernank's picture

What better way to thin the market making herd than by attacking Knight. Surely the hit was put out by Goldman or the morgue. The less players, the more control.

Thu, 08/02/2012 - 10:14 | 2672074 Panafrican Funk...
Panafrican Funktron Robot's picture

Knight had just recently acquired another dud (Penson's futures unit), so this is pretty interesting, particularly in light of other futures firms taking a gigantic fucking dump on our collective heads.  Interesting that they're being systematically wiped out.

Thu, 08/02/2012 - 09:37 | 2671883 d edwards
d edwards's picture

J P M looses billions, but don't worry-everythings OK!

Thu, 08/02/2012 - 08:24 | 2671510 malikai
malikai's picture

Deploy the Squid, prepare the Morgue.

Thu, 08/02/2012 - 08:33 | 2671548 Levadiakos
Levadiakos's picture

The Dark Knight Rises..... NOT

Thu, 08/02/2012 - 09:19 | 2671793 GMadScientist
GMadScientist's picture

The Dark Knight..."retroactively" shits its pants.

Thu, 08/02/2012 - 08:24 | 2671511 digitlman
digitlman's picture

HA! HA!

Thu, 08/02/2012 - 08:24 | 2671512 viator
viator's picture

Maybe this will loosen the Fed's bowels.

Thu, 08/02/2012 - 09:20 | 2671797 GMadScientist
GMadScientist's picture

Old Faithful Colonic.

Thu, 08/02/2012 - 08:24 | 2671514 PrintingPress
PrintingPress's picture

Providing liquidity!

Thu, 08/02/2012 - 08:24 | 2671515 orangedrinkandchips
orangedrinkandchips's picture

42 and dropping like it's hot......but who's counting?

 

This is beautiful.....another fraud blow up....just get this main stage so people finally wake up.

 

Ban the bots....

Thu, 08/02/2012 - 08:24 | 2671516 Catullus
Catullus's picture

Are they contemplating options for their severely damaged credibility? Oh yeah. No one gives fuck about that when it comes to other people's money.

Thu, 08/02/2012 - 08:26 | 2671517 Mercury
Mercury's picture

Welcome to America's capital markets.

Home of the do-over.

Thu, 08/02/2012 - 08:25 | 2671521 The Axe
The Axe's picture

holy shit  they lost money faster then MF Global

Thu, 08/02/2012 - 08:26 | 2671526 GetZeeGold
GetZeeGold's picture

 

 

Time to move to France!

 

Thu, 08/02/2012 - 08:37 | 2671576 LongSoupLine
LongSoupLine's picture

Correction:  Like Corzine, time to hide in the Hamptons.

Thu, 08/02/2012 - 08:48 | 2671638 GetZeeGold
GetZeeGold's picture

 

 

I'm pretty sure Eric Holder doesn't even know where the Hamptons are.

 

Thu, 08/02/2012 - 08:26 | 2671523 Dr. Engali
Dr. Engali's picture

Looks like Knight is about to be Corzined.

Thu, 08/02/2012 - 08:27 | 2671531 GetZeeGold
GetZeeGold's picture

 

 

Good night Jon-boy.

 

Thu, 08/02/2012 - 08:38 | 2671586 orangedrinkandchips
orangedrinkandchips's picture

good one...lol

Thu, 08/02/2012 - 08:44 | 2671620 tocointhephrase
tocointhephrase's picture

 Good night, Erin. Good night, everybody!

Thu, 08/02/2012 - 08:26 | 2671524 buzzsaw99
buzzsaw99's picture

they will have to steal a bunch of sub-pennies to make that back

Thu, 08/02/2012 - 08:26 | 2671525 jjsilver
jjsilver's picture

stuxnet.

Thu, 08/02/2012 - 08:28 | 2671537 GetZeeGold
GetZeeGold's picture

 

 

Skynet: I'll be back.

 

Thu, 08/02/2012 - 08:27 | 2671527 traderjoe
traderjoe's picture

Another example of how/why the capital markets are completely broken.

Thu, 08/02/2012 - 08:27 | 2671528 hedgeisforpussies
hedgeisforpussies's picture

its a great firm. i worked there. nothing like squid or mf global. high integrity and no bs firm. its a shame. 

Thu, 08/02/2012 - 09:02 | 2671715 rubearish10
rubearish10's picture

Sly was cool. Others, not.

Thu, 08/02/2012 - 09:13 | 2671765 Metalredneck
Metalredneck's picture

Sounds like a good enough reason to be a target.

Thu, 08/02/2012 - 11:06 | 2672291 ToNYC
ToNYC's picture

Great firm no matter when the game changes to HFT Russian Roulette. How many humans does it take to turn off the server? The failure came after the first few seconds when a veteran could see the balls awry in the air. Big heads cut all the same I hear.

Thu, 08/02/2012 - 08:28 | 2671533 jmcadg
jmcadg's picture

Call me cynical, but is this a cover for 'raided segregated accounts'.

Just wondering?

Thu, 08/02/2012 - 08:28 | 2671535 Trying to Understand
Trying to Understand's picture

Lawsuit for software author/installer too....

Thu, 08/02/2012 - 08:35 | 2671562 Getting Old Sucks
Getting Old Sucks's picture

Sooo sowwy but we no weesponsible, we over here in china, you no sue me here. 

Thu, 08/02/2012 - 08:41 | 2671600 a growing concern
a growing concern's picture

Hirarious!

Thu, 08/02/2012 - 09:15 | 2671773 TheFourthStooge-ing
TheFourthStooge-ing's picture

Doubre rucky number 88 two times hirarious, because Knight instarred software with no reading ricense agreement containing ironcrad indemnity for software company in case of caramity.

ROR!

Thu, 08/02/2012 - 09:49 | 2671956 MachoMan
MachoMan's picture

At $440m in losses, who is going to be able to shoulder that one?  What insurance company is going to be able to shoulder that one?  Can't be too many names out there.  My guess is that whoever did it (presuming no deep pocketed parent company) doesn't have the wherewithal.  If they had gone with a "trusted" software, then they probably would have had to pay big cheese (presuming it was even available) and it probably wouldn't have taken a big shit... 

Any company that doesn't have the ability to test its system before properly bringing it online (official story), probably doesn't have the means to pay for these losses.  Just spitballing.

Turnip = no lawsuit.

Thu, 08/02/2012 - 10:54 | 2672243 jumbo maverick
jumbo maverick's picture

Who? TARP II?

Thu, 08/02/2012 - 08:29 | 2671536 orangedrinkandchips
orangedrinkandchips's picture

oooh kay.....got it.

 

At first without knowing jack, I thought it was a rouge client of Knight sending in orders through them and their bot went bezerk.

 

Hint to Knight.....TEST THE FUCKING SOFTWARE BEFORE YOU IMPLEMENT IT FUCK-WADS........JUST a suggestion...

 

hell,  looks like you wont need to debug the software.....no use for it anymore! 

Thu, 08/02/2012 - 08:29 | 2671539 El Hosel
El Hosel's picture

Too small to Bail, Bitchez .

Thu, 08/02/2012 - 09:19 | 2671788 phalfa5
phalfa5's picture

TSTS   Too Small To Save     there,  fixed it

Thu, 08/02/2012 - 08:46 | 2671630 insanelysane
insanelysane's picture

Thinking they did test the software, proceeded to crap on the programmers, and the programmers made 1 minor change which reversed how the system operated.

Thu, 08/02/2012 - 09:18 | 2671785 TheFourthStooge-ing
TheFourthStooge-ing's picture

The Indian power grid blackout prevented a last minute software update. Oopsies.

Thu, 08/02/2012 - 08:29 | 2671540 Piranha
Piranha's picture

can't they just have the machine on for 30 min and then they'll be even?

Thu, 08/02/2012 - 08:29 | 2671542 PaperBear
PaperBear's picture

A very, very expensive 30 minutes on the morning of August 1st.

Thu, 08/02/2012 - 08:30 | 2671546 GetZeeGold
GetZeeGold's picture

 

 

That was fun......can we do it again!!!

 

Thu, 08/02/2012 - 08:34 | 2671558 LULZBank
LULZBank's picture

Cant you get refunds?

14 day money back guarantee or something like that?

Thu, 08/02/2012 - 08:30 | 2671547 Blopper
Blopper's picture

Perfect self-suicide.

Thu, 08/02/2012 - 08:40 | 2671574 madcows
madcows's picture

Self Suicide?  doesn't suicide imply "Self"?  I think it's redundant, sorta like saying "bad-banker" or evil-wall streeter, or corrupt politician.

 

come to think of it, I'd like Merriam Webster to officially change the word "politician" to "corruptician".  Then, we can elected our own swindlers, nepotists and racketeers.  Enough of this "representative government" crap.

Thu, 08/02/2012 - 09:39 | 2671898 GMadScientist
GMadScientist's picture

No, this was more an inept act of terror...like accidentally killing yourself with <thing you shouldn't wikipedia here> while trying to dispense it on <form of public transpo>.

Thu, 08/02/2012 - 11:10 | 2672316 ToNYC
ToNYC's picture

Judge Scalia finds that free corporate speech is representative...not clear of which voter though.

Thu, 08/02/2012 - 08:31 | 2671549 Dr. Engali
Dr. Engali's picture

Calling Jamie Dimon... We have these extra "customer funds" we would like to secure.

Thu, 08/02/2012 - 08:33 | 2671555 youngman
youngman's picture

Their explination is funny...new software..blah blah blah.....bob piss on me said it was a thousands of 100 share trades....now why do you need software for 100 share trades.....to cheat the market that is why....this is legal theft....when is the SEC finnaly going to get the balls to stop this crap...I know..its never...

Thu, 08/02/2012 - 08:37 | 2671580 Getting Old Sucks
Getting Old Sucks's picture

I like that.  Maybe they thought it was just a dry run.

Thu, 08/02/2012 - 09:56 | 2671990 WTF_247
WTF_247's picture

There are already dozens of rules in place for manipulation of price, dislocation of price and the like.  However, the SEC/FINRA only applies those to a human trading.

If you have a 1mil share order to buy IBM and you break it up into 10,000 100 share orders and then just release those all at once you are busted, or group them into flurries to manipulate price one way or another - busted

If you decide to put in 100s of fake large offers to try to drive price down to your bid, you are busted.

Likewise if you take it into 50k chuncks and repeatedly send it at market to jam the price way up you are busted.

BUT not if a computer does it.  They pretty much get a pass for everything.  Anything goes and there is no accountability.

Thu, 08/02/2012 - 08:34 | 2671559 jjsilver
jjsilver's picture

the termites are now eating through the drywall

Thu, 08/02/2012 - 08:34 | 2671560 Sofa King
Sofa King's picture

Must have programmed in metric as opposed to imperial units.

Thu, 08/02/2012 - 08:34 | 2671561 orangedrinkandchips
orangedrinkandchips's picture

All I can think of right now is the ORIGINAL KARATE KID movie....

 

"GET HIM A BODY BAG MAN!"

 

hehehehe

Thu, 08/02/2012 - 08:36 | 2671567 paddy0761
paddy0761's picture

Dark Knight indeed.

Thu, 08/02/2012 - 11:13 | 2672333 ToNYC
ToNYC's picture

Dark Knight swims with the Dark fishes in the Dark Pool and nobody is left to care but the white sheep.

Thu, 08/02/2012 - 12:19 | 2672609 hidingfromhelis
hidingfromhelis's picture

Dark Swan Algo Systems...sorry, at this time nobody is available to take your call.  Remember, you can always hit any key to cancel your order.

http://www.youtube.com/watch?v=gugbMw4LigY

Thu, 08/02/2012 - 08:36 | 2671569 NEOSERF
NEOSERF's picture

This is what is bound to happen when the complexity of the code is combined with IT basically running your trading minute by minute and then you try to cull costs down to the point where the code-builders are long gone...you see it in every industry but it is catastrophic in energy, financial and tech...

Thu, 08/02/2012 - 08:36 | 2671570 CPL
CPL's picture

Oh wait...there's more.

 

KCG and ALL the algo trading houses across the planet use the same piece of COTS product.  Same one with a contract arrangement to detail and customize the package.  Same guy wrote it as well and sell the services.  I could name maybe four people on the planet that has enough knowledge in the Algo dark arts to be of any use in fixing this issue.  And they work for that one guy.  Anyone know who it is?

 

 

Thu, 08/02/2012 - 08:49 | 2671644 I Am Not a Copp...
I Am Not a Copper Top's picture

Is the answer Jesus?

Thu, 08/02/2012 - 08:54 | 2671664 Getting Old Sucks
Getting Old Sucks's picture

I worked for the company that installed their dark fiber on Washington St.  What if they had a 30 minute, all hands, in house demo of the new software and pulled the wrong outgoing patchcord?

Thu, 08/02/2012 - 08:56 | 2671679 buzzsaw99
buzzsaw99's picture

it would be funny if the janitor knocked loose some cables while mopping and plugged them back in worng.

Thu, 08/02/2012 - 09:06 | 2671733 Getting Old Sucks
Getting Old Sucks's picture

Everything is a ring configuration.  If one side goes open, the switch will go into "protect" and transmit the other way.  An alarm will immediately sound at their NOC. 

Thu, 08/02/2012 - 08:55 | 2671672 buzzsaw99
buzzsaw99's picture

free sergey. oh wait, he's out, never mind

Thu, 08/02/2012 - 08:37 | 2671577 crghill
crghill's picture

Ding dong the witch is dead

the wicked witch, that silly bitch

Ding dong the wicked witch is dead

Thu, 08/02/2012 - 09:08 | 2671742 DCFusor
DCFusor's picture

Unfortunately, she isn't.  My ex is still around and jonesing for bucks and hassle.

Thu, 08/02/2012 - 09:10 | 2671754 JuicedGamma
JuicedGamma's picture

Sadly Knight's losses are everyone else's gains and will only encourage the hiring of the latest crop of physics PhDs to do the stupid work of combing thru trading data attempting to find the next kandy ass programming/installation snafu.

The music will only stop if the regulators step on the cock-a-roaches.

Thu, 08/02/2012 - 08:38 | 2671581 toomanyfakecons...
toomanyfakeconservatives's picture

What about the Berserk Algo-Politican bill that has been foisted upon the American people? The untold financial and social losses will not go unpunished forever. Millions of good men, active-duty military, patriots, gun owners, veterans, reservists, police, federal marhalls, oath keepers, and so on have been silently observing, taking notes, and positioning themselves. The MASS ARRESTS are coming. Sure as the sun will cross the sky, they are coming... http://tinyurl.com/cd5cyjo/

Thu, 08/02/2012 - 08:43 | 2671616 rsnoble
rsnoble's picture

That's what NDAA, 30k drones etc is all about. We're coming for them and they know it.

Thu, 08/02/2012 - 08:50 | 2671650 toomanyfakecons...
toomanyfakeconservatives's picture

That's right... only they don't have to worry about "preppers" and nutbag militiamen coming to get them... it's their generals, their admirals, their pilots, their paid mercenaries, their aides, and the people the cook their food and take out their trash who have the real daggers up their sleeves.

Thu, 08/02/2012 - 10:02 | 2672017 Jake88
Jake88's picture

Wasn't David Wilcock running for his life under death threats from space aliens or men in black or illuminati or something. And you're posting a link to him. Be careful they are watching everything you do.

Thu, 08/02/2012 - 14:48 | 2673372 toomanyfakecons...
toomanyfakeconservatives's picture

Listen to the message, don't discount it because of the messenger.

Thu, 08/02/2012 - 08:39 | 2671588 firstdivision
firstdivision's picture

Time to buy hand over fist

Thu, 08/02/2012 - 08:44 | 2671622 CPL
CPL's picture

Let us know how that all works out.

Thu, 08/02/2012 - 08:39 | 2671592 Pay Day Today
Pay Day Today's picture

So was this software 'glitch' an accident. Or insider revenge?

Thu, 08/02/2012 - 12:12 | 2672582 Boxed Merlot
Boxed Merlot's picture

Or insider revenge?...

 

Or outside attack?  Quick, get a couple nsa agents on this right away. 

 

Nah, they'll probably end up arresting Tyler because he reported it. 

Thu, 08/02/2012 - 08:41 | 2671603 rsnoble
rsnoble's picture

Serves the bastards right. I wonder if anyone got fired over this?

Thu, 08/02/2012 - 08:42 | 2671607 giovanni_f
giovanni_f's picture

would be curious to have a look at KCGs latest slide deck titled "information technology cost savings measures"

Thu, 08/02/2012 - 08:42 | 2671608 orangedrinkandchips
orangedrinkandchips's picture

And now the die is shaken, now the die must fall.
There aint a winner in the game, he don't go home with all.
Not with all.

Thu, 08/02/2012 - 08:42 | 2671609 chinaboy
chinaboy's picture

Zerohedge please help us keep track what will they do to the CTO and who are the genius software engineers pulling off this corporate suicide.

 

Thank you

Thu, 08/02/2012 - 09:14 | 2671769 Getting Old Sucks
Getting Old Sucks's picture

Scary to think that these are suppose to be the best and brightest while those who don't make the cut work at our nuclear power plants.

Thu, 08/02/2012 - 09:40 | 2671912 GMadScientist
GMadScientist's picture

Yeah, I'm betting this kicks off many many code reviews from nervous suits used to letting the autopilots engage suddenly feeling "that clench".

Thu, 08/02/2012 - 08:44 | 2671612 stock trout
stock trout's picture

"Knight pursuing taxpayer dollars to stay in business"

Fixed it.

Thu, 08/02/2012 - 08:43 | 2671614 tradewithdave
tradewithdave's picture

Please excuse the novice... but how do you go long glitches?

www.tradewithdave.com

Thu, 08/02/2012 - 08:44 | 2671621 spanish inquisition
spanish inquisition's picture

JPM is pissed. I will guess they estimated the loss by figuring they are 50% of the market, they sucked only $85M (of $170M) of $440M potential profits. I mean it helped with the bottom line (is it gonna get a special line in the reports?), but someone was skimming alot of their profits.

Thu, 08/02/2012 - 08:45 | 2671626 adr
adr's picture

Did every stock that was affected get its price reset to where it was before the algo struck? Apple, IBM, MCD and the others didn't get reset after the beserk gatormouth algo a few weeks ago that left them all much higher.

If a stock ends up 10% higher or 10% lower because of a bogus algo, that really has an effect on the market. You could make or lose a lot of money on a stock for no reason at all. Prices are being set by computers with no rationale behind their moves.

I would say this invalidates all pricing in the stock market and all automated computerized trading must be stopped. How can you justify gains created by a program trading in a way it wasn't meant to?

Sadly I don't think it will stop until a rogue algo takes Apple stock to $50 wiping out over $500 billion in one day.

Thu, 08/02/2012 - 08:52 | 2671634 ptoemmes
ptoemmes's picture

With apologies to Monty Python's Black Knight, but what could be more apropos:  http://www.youtube.com/watch?v=mjEcj8KpuJw

Thu, 08/02/2012 - 08:51 | 2671652 Savvy
Thu, 08/02/2012 - 08:57 | 2671688 toomanyfakecons...
toomanyfakeconservatives's picture

Years from now, after the MASS ARRESTS clean house (http://tinyurl.com/cd5cyjo/), after the FED is dissolved, after the NWO is routed, and after the Constitution is restored, financial crimes and mass murder crimes like this will be documented and displayed in a museum for our children to wonder at and learn from.

Thu, 08/02/2012 - 08:52 | 2671654 j0nx
j0nx's picture

As I have said repeatedly any time something fishy like this happens: reelection campaigns don't finance themselves bitches.

Thu, 08/02/2012 - 09:03 | 2671719 jekyll island
jekyll island's picture

It was oil for the last election, I wonder when they will get around to gold?  Patiently waiting....

Thu, 08/02/2012 - 08:52 | 2671658 fiftybagger
fiftybagger's picture

Maybe ya'll should consider the possibility that Knight pissed off some really big people?

 

http://www.youtube.com/user/BrotherJohnF?feature=mhee

Thu, 08/02/2012 - 08:56 | 2671677 exartizo
exartizo's picture
Information about the guy whose head likely is on the chopping block at KCG: Lehmann, David  Brief Biography

Mr. David S. Lehmann is Senior Managing Director, Head - Electronic Execution Services of Knight Capital Group, Inc. He oversees the Company’s electronic execution offerings. He has over 25 years of experience in the securities industry. Mr. Lehmann was named Head of Electronic Execution Services in November 2011. Prior thereto, he was the Head of Institutional Sales since April 2011. From November 2002 to April 2011, Mr. Lehmann headed the Company’s institutional sales office in Chicago. He previously worked at Montgomery Securities, Salomon Brothers and Merrill Lynch & Co. Mr. Lehmann received a B.S. in Business Administration from the University of Illinois, Champaign/Urbana in 1984 and an M.B.A. in Finance from Columbia University in 1986.

Thu, 08/02/2012 - 09:21 | 2671802 Vegamma
Vegamma's picture

Nice post Ex. So he was sales for his whole career and that qualified him to become Head of Electronic Execution??? Took him less than 10 months to blow the place sky high. Night, Night, Knight

Thu, 08/02/2012 - 10:24 | 2672115 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

He executed all right.  He damn near executed the whole firm.

Thu, 08/02/2012 - 08:58 | 2671696 exartizo
exartizo's picture

Oh, and likely this guy too:

Sadoff, Steven  Brief Biography

Mr. Steven J. Sadoff is Executive Vice President, Global Head of Operations, Services & Technology of Knight Capital Group, Inc. He oversees the Operations, Service and Technology Group which handles the operations, facilities, infrastructure, electronic services and technology functions throughout the Company’s global locations. Mr. Sadoff has been with the Company since April 2002 and was named Executive Vice President in January 2009. Prior to joining the Company, Mr. Sadoff was the Chief Information Officer for BondBook, responsible for global oversight, strategy, purchasing and implementation of technology. From 1995 until 2000, he was with Merrill Lynch & Co. where for the last two years, he was a director responsible for technology for the Global Liquidity and Credit businesses, in addition to e-commerce initiatives. For the first three years he was with Merrill Lynch Japan, responsible for front office technology and infrastructure. From 1990 to 1995, Mr. Sadoff was with Lehman Brothers, most recently as a Vice President. Mr. Sadoff currently serves on the Board of Managers of Direct Edge Holdings LLC, the advisory board for Corvil Ltd., the Technology/Operations Customer Advisory Board for Thomson Reuters, the board of Pico Quantitative Trading LLC, and as a member of the SIFMA Operations & Technology Steering Committee. Mr. Sadoff holds a B.S. in Computer Science, an M.S. in Electrical Engineering, and a D.Sc. in Computer Science, all from Washington University in St. Louis.

Thu, 08/02/2012 - 14:21 | 2673252 MillionDollarBoner_
MillionDollarBoner_'s picture

Steven J Sadoff...

Works for Knight Capital Group...

Worked for Lehman Brothers... 

What's the J stand for - Jonah ?;o)

Thu, 08/02/2012 - 09:02 | 2671713 bluemaster
bluemaster's picture

Knight trying to make all money today first go up stop all shorts and now sink and who knows where will be close price .

Depend if "night" make all money back , what a joke of market Emini become or maybe I just didn;t notice was like that last 20 years

 

Thu, 08/02/2012 - 09:03 | 2671721 Ricky Bobby
Ricky Bobby's picture

I can picture this. Upper managers driving the IT serfs 24/7 with no respect for the technical complexity of the project. The only thing the fucking managers are thinking about is the money they are going to make. 
An engineering team tries show the difficulty and the need to test more, but there is no limit to the delusion of the money masters and they shout get it fucking done now or you are fired.

Thu, 08/02/2012 - 09:15 | 2671770 Yes_Questions
Yes_Questions's picture

 

 

so who ended up with the $440mil or was it just disbursed into the racket?

Thu, 08/02/2012 - 09:15 | 2671774 Dermasolarapate...
Dermasolarapaterraphatrima's picture

"There's never been a better time to buy Knight."

Thu, 08/02/2012 - 09:21 | 2671803 Getting Old Sucks
Getting Old Sucks's picture

I think I'd wait to see if they have any clients left by COB tomorrow.

Thu, 08/02/2012 - 09:22 | 2671808 Downtoolong
Downtoolong's picture

Some fucking traders they are. If only they had the foresight to short the shit out of their own stock on Tuesday.

Thu, 08/02/2012 - 09:22 | 2671809 mrdenis
mrdenis's picture

when did Corzine become the CEO of Knight ?

Thu, 08/02/2012 - 09:29 | 2671829 Doode
Doode's picture

I think they stopped paying tech guys and they stopped caring. Heard it was a real problem across the street - the fear of losing one's job is getting replaced with a resentment of high stress long hours and no pay. Folks used to getting paid much more for less time spent are simply burning out after 4 years of crap with no end in sight. It applies to all support functions - I am having a tough time getting my support folks to do anything on time these days. They leave home way way too early. Just a thought. 

Thu, 08/02/2012 - 12:04 | 2672552 JLee2027
JLee2027's picture

Delivering timely properly working software does result eventually in being terminated because you aren't needed anymore. You are in fact punished for being good.

I never solved that when I worked in IT so that's the reason I left the industry.

Thu, 08/02/2012 - 09:29 | 2671835 DeFeralCat
DeFeralCat's picture

Maybe next time they should roll out their software to five stocks and not 150. If they had used Facebook, no one would have noticed that they had a problem. Everyone would have thought that it was .. well. Facebook

Thu, 08/02/2012 - 09:29 | 2671836 jplains04
jplains04's picture

I honestly believe they were HACKED! by the highest order...no proof just gut feeling...they didn't playball with Nasdaq or somebody and they were taken down...

Thu, 08/02/2012 - 09:31 | 2671845 Doode
Doode's picture

Could be the next HFT trading strategy silently taking over the street - flash crash, which was not a hack created an enourmous opportunity for an enterprising firm with pirate's code of ethics.

Thu, 08/02/2012 - 09:30 | 2671840 jplains04
jplains04's picture

I honestly believe they were HACKED! by the highest order...no proof just gut feeling...they didn't playball with Nasdaq or somebody and they were taken down...

Thu, 08/02/2012 - 09:47 | 2671946 fnordfnordfnord
fnordfnordfnord's picture

Maybe they stiffed an outside consultant, and chased him out the door before he had a chance to check that there were no errant bits flipped, or signs inverted. That would be a shame.

Thu, 08/02/2012 - 12:01 | 2672541 JLee2027
JLee2027's picture

Nah...just too stupid to properly implement things.

Thu, 08/02/2012 - 09:30 | 2671844 ub40onlyonce
ub40onlyonce's picture

Found this one on Linkedin.

http://www.linkedin.com/pub/pranith-ramamurthy/14/366/3aa

[

Specialties

• Languages : C, C++, Java, Python( beginner)
• Operating systems : Linux, Windows.
• Web Technologies : XML , PHP, CSS, HTML, SOAP, REST.
• Database Systems : MySql, MS Access, Sqlite.]

Thu, 08/02/2012 - 09:37 | 2671881 Gandalf6900
Gandalf6900's picture

Good knight and good luck...

Thu, 08/02/2012 - 09:59 | 2672007 shovelhead
shovelhead's picture

"Why so serious?"

Hehehe...I couldn't stop myself.

Thu, 08/02/2012 - 10:02 | 2672015 rosiescenario
rosiescenario's picture

.....after years of gaining confidence from his employer, Goldman's sleeper mole was finally admitted to the ranks of of the algo handlers at Knight.....Loyd's earlier directive was in the front of his mind:"Make it look like some nerd screwed up..."

Thu, 08/02/2012 - 10:08 | 2672052 LMAOLORI
LMAOLORI's picture

 

Captain Obvious but good read none the less

Markets Are Broken

http://finance.townhall.com/columnists/jeffcarter/2012/08/02/markets_are_broken/page/full/

Thu, 08/02/2012 - 10:18 | 2672090 YesWeKahn
YesWeKahn's picture

They startted to use the new version of "robort trader"?

Thu, 08/02/2012 - 10:21 | 2672092 Blue Horshoe Lo...
Blue Horshoe Loves Annacott Steel's picture

Ha ha ha ha ha ha...

They could make a movie about this called "The Dark Knight Crashes".

Thu, 08/02/2012 - 12:43 | 2672708 phalfa5
phalfa5's picture

What?  Too soon?

Thu, 08/02/2012 - 11:12 | 2672325 Tunga
Tunga's picture

Stock assisted suicide?

Thu, 08/02/2012 - 11:27 | 2672399 Lost Wages
Lost Wages's picture

FRIGHT KNIGHT! It's a financial horror film.

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