Knight Capital Considers Filing A Lawsuit Against Facebook Over IPO Losses
Knight Capital Group Inc. is considering a lawsuit against Facebook to recoup the losses from errors caused during the Facebook IPO. Knight Capital, an electronic trader company, saw their quarterly profit dropped by 81%.
They want to compensate their clients for their losses when orders originally placed at high amounts on the Nasdaq exchange were not filled until the price fell below that level.
“We are evaluating all legal rights and remedies in connection with the Facebook IPO,” stated Knight Capital CEO Thomas Joyce in a statement when announcing the company’s second-quarter results. Knight had recorded a pre-tax loss of $35.4 million (23 cents per share) in the second quarter from losses that happened on the Facebook IPO.
Knight lost money because they had to compensate clients and from their own trading losses during a period of two hours after Facebook’s shares started trading.
Knight was one out of four major market makers in the Facebook IPO along with UBS, Citigroup, and Citadel Securities.This article was written by Amit Chowdhry. You can follow me at @amitchowdhry or on Google+ at +AmitChowdhry