Knight Capital Group said Thursday it will accept the Nasdaq stock market’s $62 million payback plan for companies that suffered losses on Facebook’s botched market debut in May.
The largest trader of U.S. shares by volume, Knight said it suffered losses far in excess of the Nasdaq’s proposed payout as a result of the confusion that surrounded the Facebook public stock offering.
Technical hiccups on the Nasdaq stock exchange on Facebook’s first day of trading led to a delayed opening for the stock and left investors wondering if their orders to buy or sell the social network’s stock went through.
Knight and several other market-making firms and brokerages said they lost a total of upwards of $500 million as a result of the trading glitch. Knight alone said it lost over $35 million.
Knight said it would rather see the Nasdaq cover all trading losses by its member firms, but supports Nasdaq's move to increase the payback fund to $62 million from an earlier offer of $40 million. Knight’s change of heart came in regulatory filing dated Aug. 29.
However, Knight said it rejects a stipulation that it must waive the right to sue the Nasdaq to receive compensation.
A trading error at Knight earlier this month cost the company $440 million and brought it to the brink of collapse. It avoided going out of business by clinching a deal worth $400 million with a group of investors.
Reuters contributed to this report.
Wednesday, September 19
Knight OKs Nasdaq's $62 million Facebook payout
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