CMKM Diamonds Inc. (fka CMKX)

[Ignutz]

The SEC deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Sections 15(b)(4) and 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Knight Securities, L.P. ("Knight" or the "Firm").

“ … Moreover, from January 2000 through December 2001, Knight failed reasonably to supervise Knight's institutional sales traders, including Knight's Leading Sales Trader, who repeatedly misused ACT trade modifiers. </U></I></B> Knight's sales traders' misuse of ACT trade modifiers limited Knight's customers' ability to assess the execution quality they were receiving from Knight. Knight's failure to prevent the traders from repeatedly misusing the ACT trade modifiers also limited the ability of the Firm's institutional customers to detect the fact that Knight was extracting excessive profits at their expense -- and resulted in Knight's institutional orders trading ahead of certain limit orders placed by Knight's customers.

Knight also violated the books and records provisions of the federal securities laws from January 2000 through May 2002. Specifically, Knight did not retain email communications relating to its business. In addition, Knight's purchase and sales blotter (also referred to as a trading blotter) contained inaccurate information regarding time of execution of certain trades. Finally, Knight failed to include required information on some order tickets and failed to maintain certain order tickets for the time period required by the federal securities laws ...”

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<B><I><U> "ACT" refers to the automated system owned and operated by The Nasdaq Stock Market, Inc. which, among other things, transmits reports of transactions to the National Trade Reporting System for dissemination to the public and the industry. </U></I></B>

http://www.sec.gov/litigation/admin/34-50867.htm