Hey greedy, looks like one of your buddies is going down...
Market Maker Knight In The SEC HotSpot.
Reuters-Knight Capital unit may face SEC charges
Monday June 27, 8:45 am ET
NEW YORK (Reuters) - Knight Capital Group Inc. (NasdaqNM:NITE - News), one
of the largest traders of Nasdaq-listed shares, on Monday said its asset
management unit faces possible civil charges from the U.S. Securities and
Exchange Commission over possible improper trading activity.
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Knight said Deephaven Capital Management LLC and a former Deephaven employee
received "Wells notices" from the SEC.
It said the notice to Deephaven indicates that SEC staff may recommend civil
action alleging that the unit violated securities laws that are aimed at
stopping fraud.
A call to the SEC was not immediately returned. Knight disclosed the Wells
notices in an SEC filing. It did not name the former employee.
Knight said the case concerns trading activity associated with private
investments in public equities, or PIPEs, from June 1, 1999 through March
2004.
In a letter to investors that Knight released in the filing, Deephaven said
it believes the Wells notice results from an industrywide review that began
last summer related to PIPEs transactions.
Deephaven said its PIPEs activities represented an "insignificant portion"
of assets held by its Market Neutral Master Fund LP, which discontinued such
investments by August 2004.
A Wells notice indicates the SEC may accuse the recipient of wrongdoing, and
give the recipient a chance to respond. Deephaven said it is cooperating
fully.
Knight is based in Jersey City, New Jersey. Deephaven has offices in
Minnetonka, Minnesota. (Additional reporting by Karey Wutkowski
