The Securities and Exchange Commission

[DueDillinger]

3 former Knight Trading workers get Wells notices

Associated Press

JERSEY CITY, N.J. - Three former employees of Knight Trading Group Inc., a top market maker in Nasdaq stocks, have received Wells notices from federal regulators informing them they could be subject to enforcement or disciplinary actions, the company said Monday.

Knight Trading said earlier this month that the Securities and Exchange Commission and National Association of Securities Dealers issued Wells notices to the company's Knight Securities L.P. unit and its founder and former chief executive, Kenneth D. Pasternak.

The notice from the SEC Division of Enforcement said its investigations relate to trading, supervision and record-keeping from 1999 through 2001, focusing in particular on whether the company traded in front of client orders.

In its annual report issued Monday, Knight Trading said that three other former employees also received Wells notices. The company did not identify them.

Wells notices offer those receiving them an opportunity to explain why regulators shouldn't pursue enforcement or disciplinary actions.

The notices came from both the SEC and NASD, company spokeswoman Margaret Wyrwas said Monday. The company would have no further comment, she said.

Knight Trading said it did not expect the resolution of the SEC and NASD investigations to have a serious adverse effect on the company's financial condition, but the annual report said the probes could have a material impact on operating results in a particular period.

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