MEMBER FIRM: KNIGHT SECURITIES, INC.
BD NUMBER: 38599
NASD Member Firm: KNIGHT SECURITIES, INC.
BD Number: 38599
12/15/98 SUMMARY INFORMATION
12/15/98: 4/17/98 NASD CENSURE AND FINE
ACCEPTANCE, WAIVER AND CONSENT; KNIGHT SECURITIES, INC. WAS CENSURED AND FINED
$10,000.00 BY THE NASD. THE NASD ALLEGED THAT THE FOLLOWING ACTIVITY OCCURRED:
FIRM EXECUTED 116 SHORT SALE TRANSACTIONS WITHOUT IDENTIFYING THE TRADES AS
SHORT SALES IN THE AUTOMATED CONFIRMATION TRANSACTION SYSTEM (ACT) IN
VIOLATION OF NASD MARKETPLACE RULE 6130. FIRM EXECUTED FOUR SHORT SALE
TRANSACTIONS IN NASDAQ NATIONAL MARKET SECURITIES AT OR BELOW THE PRECEDING
INSIDE BID WHEN THE CURRENT INSIDE BID WAS BELOW THE PRECEDING INSIDE BID IN
EACH OF THE SECURITIES IN VIOLATION OF NASD CONDUCT RULE 3350. FIRM ALSO
EXECUTED 21 SHORT SALES WITHOUT MAKING AN AFFIRMATIVE DETERMINATION FOR EACH
OF THE TRANSACTIONS IN VIOLATION OF NASD CONDUCT RULE 3370.***$10,000.00 PAID
ON 5/22/98, INVOICE #98-MS-42***[NASD COMPLAINT NO. CMS980027]hk
12/15/98: 8/22/97 NASD CENSURE AND FINE
ACCEPTANCE, WAIVER AND CONSENT; KNIGHT SECURITIES, INC. WAS CENSURED AND FINED
$5,500.00 BY THE NASD. THE NASD ALLEGED THAT THE FIRM VIOLATED SEC RULE
11Ac-1 ("SEC FIRM QUOTE RULE"), NASD CONDUCT RULES 2110, 3010 AND 3320, AND
MARKETPLACE RULE 4613(b) FOR THE FOLLOWING ACTIVITY: FIRM FAILED TO EXECUTE 28
ORDERS WHICH WERE PRESENTED TO THE FIRM AT THE FIRM'S PUBLISHED BID OR
PUBLISHED OFFER, AND, THEREFORE, FAILED TO HONOR ITS PUBLISHED QUOTATION. IN
ADDITION, THE FIRM FAILED TO ESTABLISH, MAINTAIN AND ENFORCE WRITTEN
SUPERVISORY PROCEDURES TO ENSURE COMPLIANCE WITH THE ABOVE RULES.***$5,000.00
PAID ON 10/1/97 INVOICE NO. 97-MS-830***[NASD COMPLAINT NO. CMS970012 AWC]hk
12/15/98: 7/11/97 NASD FINE
ACCEPTANCE, WAIVER AND CONSENT; KNIGHT SECURITIES, INC. WAS CENSURED AND FINED
$1,000.00 BY THE NASD WITH A REQUIREMENT TO CONDUCT A COMPLIANCE CONFERENCE.
THE NASD ALLEGED THAT THE FIRM VIOLATED MARKETPLACE RULE 4613(d) FOR ENTERING
QUOTATIONS IN NASDAQ NATIONAL MARKET SYSTEM SECURITIES THAT EXCEEDED THE
PARAMETERS FOR MAXIMUM ALLOWABLE SPREADS. ***$1,000.00 PAID ON 8/22/97,
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INVOICE #97-MS-674***[NASD COMPLAINT NO. CMS960065 AWC]hk
12/15/98: 6/16/97 NASD FINE
ACCEPTANCE, WAIVER AND CONSENT; KNIGHT SECURITIES WAS FINED $2,000.00 BY THE
NASD. THE NASD ALLEGED THAT THE FIRM VIOLATED SEC RULES 17a-3, 17a-4 AND NASD
CONDUCT RULES 2110 AND 3010 IN THAT THE FIRM FAILED TO CREATE AND MAINTAIN A
RECORD OF A CUSTOMER LIMIT ORDER THAT WAS RECEIVED AND RELAYED TO MASH. IN
ADDITION, THE FIRM FAILED TO ENFORCE WRITTEN SUPERVISORY PROCEDURES DESIGNED
TO PREVENT THE VIOLATION.*** $2,000.00 PAID ON 7/14/97, INVOICE
#97-MS-543***[NASD COMPLAINT NO. CMS960119 AWC]hk
12/15/98: 6/10/97 NASD FINE
ACCEPTANCE, WAIVER AND CONSENT; KNIGHT SECURITIES WAS FINED $2,000.00 BY THE
NASD WITH A REQUIREMENT TO CONDUCT A RULE EDUCATION CLASS FOR ITS TRADERS. THE
NASD ALLEGED THAT THE FIRM VIOLATED MARKETPLACE RULE 4613(d) FOR ENTERING
QUOTATIONS IN NASDAQ NATIONAL MARKET SYSTEM SECURITIES THAT EXCEEDED THE
PARAMETERS FOR MAXIMUM ALLOWABLE SPREADS IN THREE SECURITIES.***$2,000.00 PAID
ON 7/21/97, INVOICE #97-MS-546*** [NASD COMPLAINT NO. CMS960187 (A) AWC]hk
12/15/98: 6/10/97 NASD FINE
ACCEPTANCE, WAIVER AND CONSENT, KNIGHT SECURITIES WAS FINED $6,000.00 BY THE
NASD. THE NASD ALLEGED THAT THE FIRM VIOLATED NASD CONDUCT RULES 2110, 3010
AND IM-2110-2 FOR TRADING THROUGH A CUSTOMER LIMIT ORDER. THE FIRM ALSO
FAILED TO EXECUTE 16 CUSTOMER LIMIT ORDERS WITHIN ONE MINUTE OF THE
TRANSACTION, TRIGGERING THE OBLIGATION TO SATISFY SUCH ORDERS. THE FIRM'S
MONITORING SYSTEM FAILED TO CAPTURE THE TRADE THROUGH A CUSTOMER LIMIT ORDER.
IN ADDITION, THE FIRM'S WRITTEN SUPERVISORY PROCEDURES FAILED TO DETECT OR
PREVENT THE VIOLATION.***$6,000.00 PAID ON 7/14/97, INVOICE #97-MS548***[NASD
COMPLAINT NO. CMS960216(A) AWC]hk
12/15/98: 4/23/97 NASD FINE
ACCEPTANCE, WAIVER AND CONSENT; KNIGHT SECURITIES WAS FINED $2,000.00 BY THE
NASD. THE NASD ALLEGED THAT THE FIRM ENTERED OR MAINTAINED QUOTATIONS IN THE
NASDAQ STOCK MARKET, DURING NORMAL BUSINESS HOURS, WHICH CAUSED A LOCKED
MARKET CONDITION TO OCCUR IN TWO SECURITIES.***$2,000.00 PAID ON 6/4/97,
INVOICE #97-MS-437*** [NASD COMPLAINT NO. CMS960206]hk
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12/15/98: 12/19/96 NASD CENSURE AND FINE
LETTER OF ACCEPTANCE, WAIVER, AND CONSENT; KNIGHT SECURITIES WAS CENSURED AND
FINED $50,000.00 BY THE NASD FOR ALLEGED VIOLATIONS OF NASD CONDUCT RULES 2110
AND 3010. WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE FIRM CONSENTED TO
THE DESCRIBED SANCTIONS: THAT IT EXECUTED DAY LIMIT ORDERS AFTER SUCH ORDERS
HAD EXPIRED AND THAT THE FIRM FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE
SUPERVISORY PROCEDURES THAT WOULD DETECT AND DETER THE ABOVE
CONDUCT.***$50,000.00 PAID ON 1/22/97, INVOICE NO. 97-MS-47*** [NASD COMPLAINT
NO. CMS960217]hk
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