From another board:
DJ NASD Charges Knight Trading Ex-CEO With Overlooking Fraud
WASHINGTON (Dow Jones)--The National Association of Securities Dealers accused former chief executive of Knight Trading Group Inc. (NITE) Kenneth Pasternak and a former manager with overlooking wrongful trading from 1999 to 2000 at the investment firm.
The charges also targeted the former head of Knight's Institutional Sales Desk, John Leighton, who is further accused of pocketing millions from the wrongful trading.
In a press release Monday, the NASD said the two permitted a leading institutional sales trader, who is also Leighton's brother, with generating $135 million in trading profits.
NASD said the extraordinarily high amount, about 30% of the trading profits on Knight's institutional sales desk, should have sounded alarms with company supervisors.
Instead, the NASD said Pasternak approved of an arrangement where Leighton would collect half of his brother's trading profits. Leighton, his brother's boss, assigned most of Knight's largest customer accounts, the NASD said.
Pasternak, who served on the NASD's board of governors from 2000 to 2001, is further accused of failing to establish safeguards at the firm to prevent such wrongful trading. In January 2002, Pasternak resigned from the company he co-founded.
In December, Knight paid $79 million to settle charges from the NASD and the Securities and Exchange Commission related to the actions of Leighton's brother. Knight was accused of delaying the filing of client orders for personal profit gain.
-Jerry Abejo; Dow Jones Newswires; 201-938-5400; AskNewswires@dowjones.com |
