Knight Capital Names Tomczyk, Brand to Board After Rescue
Knight Capital Group Inc. (KCG) named directors to its board from three of the companies that rescued the market maker after a computer malfunction caused a $440 million loss.
TD Ameritrade Holding Corp. (AMTD) Chief Executive Officer Fred Tomczyk, Blackstone Group LP (BX) managing director Martin Brand and Matthew Nimetz of General Atlantic LLC will all join the board with immediate effect, Knight said today in a statement.
Knight’s computers bombarded the market with unintended orders just after trading began on Aug. 1, causing volume to surge and prices to swing in dozens of securities. The company faced insolvency in the days following the mishap as customers of its market-making unit took business elsewhere.
The $440 million loss depleted Knight’s capital and forced it into a rescue by investors who bought securities convertible into a stake of more than 70 percent of the Jersey City, New Jersey-based firm. Blackstone, a private equity company, and Getco LLC, the automated trading firm backed by General Atlantic, each purchased $87.5 million of convertible stock, while broker TD Ameritrade got $40 million, according to a regulatory filing by Knight earlier this month.
Knight had announced plans to appoint three directors --one selected by Blackstone, another by General Atlantic, and one subject to approval by Jefferies Group Inc. (JEF) -- in an Aug. 6 filing with the Securities and Exchange Commission.
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