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To: Evan who wrote (98)	1/10/2002 1:40:37 PM
From: Evan	Respond to of 613

WASHINGTON, Jan 7 (Reuters) - Knight Trading Group Inc. (NasdaqNM:NITE - news), the No. 1 share dealer on the Nasdaq exchange, has been fined more than $1.5 million for a series of violations, including failing to honor trades at prices it publicly posted. ADVERTISEMENT The penalty, announced on Monday by the National Association of Securities Dealers, is the largest ever imposed by that regulatory body for the violations involved. Knight was ordered to pay a $700,000 fine to the NASD and $800,000 plus interest to its clients. Knight, which went through a period of exploding trading volumes and bumper profits during the technology-fueled bull run of the late 1990s but has recently been struggling to boost profits, settled with the NASD without admitting or denying the allegations, the NASD said. Shares of Knight slipped 5 cents to $13.61 Monday on Nasdaq. The stock has traded between $7.25 and $24.50 in the past 12 months. A spokeswoman for Knight was not immediately available for comment. Knight has seen its profits erode as the stock market has slumped. In December, Chairman and Chief Executive Kenneth Pasternak, the firm's founder, announced he would retire to possibly seek public office. The Jersey City, N.J.,-based firm also faces profitability questions related to the shift to trading stocks in pennies rather than fractions. Trading spreads, the price difference between what a buyer and seller are asking for a particular stock, have narrowed by an average of more than 50 percent since the shift in April, 2001. Share dealers such as Knight make their income from those spreads. The company has undergone two rounds of job cuts and reported its first-ever quarterly loss since the shift. According to the NASD, Knight also broke rules designed to keep markets from becoming ``locked and crossed.'' Nasdaq markets become ``locked and crossed'' when dealers offer to sell shares at prices lower than the lowest offer to buy shares, which can lead to delays in stock sales. Additionally, the NASD said that Knight failed to provide the best way to process trades for 645 orders, causing customers to pay higher prices for stocks. ``It is critical that no matter how rapid a firm's business growth, the commitment to develop and maintain systems to ensure compliance must keep pace,'' NASD Regulation President Mary Schapiro said. ``This is fundamental to the success of our markets and the protection of investors.''