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Market maker to take $79 million charge to settle SEC
By CBS MarketWatch
Last Update: 7:14 AM ET July 7, 2004
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LONDON (CBS.MW) -- Knight Trading, the largest market maker in Nasdaq stocks, warned Wednesday that second-quarter earnings would miss expectations and said it would take a $79 million charge to pay for a settlement with U.S. regulators.
Knight said it reached an agreement in principle to settle with the Securities and Exchange Commission and NASD to settle a probe into institutional trade activity, conduct and supervision that occurred in 1999 through 2001; and books and records, document production and record-keeping deficiencies.
Knight expects its Knight Securities subsidiary will neither admit nor deny the findings as part of the settlement.
Terms call for Knight to disgorge $41 million in institutional trading profits, and pay $13 million in interest and $25 million in penalties.
Knight said it would miss the second quarter expectations as a result of "market conditions were challenging, with volatility and volumes low in the equity and options markets."
Knight said it now expects to report earnings excluding one-time items of 6 to 11 cents a share, below the average analyst estimate compiled by Thomson First Call of 15 cents a share.
"The trio of rising rates, higher oil prices and an unstable Middle East worked to keep investors, both retail and institutional, on the sidelines," said chief executive Thomas Joyce. "We believe that this slowdown is not a long-term issue but an event-driven downturn fueled by specific uncertainties."
The stock (NITE: news, chart, profile) closed Tuesday down 58 cents at $9.23.
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