Two ex-Knight execs charged with improper trading
NEW YORK, March 7 (Reuters) - Financial regulator NASD on Monday charged a former chief executive of Knight Securities and another former executive with failing to enforce NASD rules and federal securities laws in 1999 and 2000.
NASD said in a statement it has charged former Knight Chief Executive Kenneth Pasternak and John Leighton, former head of the company's institutional sales desk, with "supervisory violations in connection with fraudulent sales to institutional customers."
In December, Knight's parent company, Knight Trading Group Inc. , one of the largest traders of Nasdaq-listed shares, reached a $79 million settlement with regulators over allegations that Knight Securities had engaged in improper trading and business practices.
Under the agreement, Knight, based in Jersey City, New Jersey, was was directed to return about $41 million in institutional trading profits and pay about $13 million in interest and $25 million in penalties.
"From Knight's point of view, this matter was concluded in December 2004 when we settled with regulators," Margaret Wyrwas, a spokeswoman for Knight Trading, said on Monday.
The NASD said that from January 1999 to September 2000, Leighton's brother -- whom Leighton himself supervised -- generated nearly $135 million in trading profits for Knight, which amounted to 30 percent of the institutional sales unit's total trading profits. NASD said it is still investigating Leighton's brother.
NASD said Pasternak was responsible for the "deficient" supervisory structure by assigning John Leighton to supervise his brother's trading, while at the same time approving a profit-sharing arrangement for the brothers.
Pasternak also failed to implement supervisory procedures that could have addressed the conflict of interest, the NASD said. Pasternak was a member of NASD's Board of Governors from May 2000 until September 2001.
Shares of Knight rose 11 cents, or 1 percent, to $10.37 in midday trade on Nasdaq.
03/07/05 15:38 ET |
