* About 75 people will be laid off as part of restructuring
* Knight expects Q1 pretax charge between $9 mln and $11 mln
By John McCrank
Feb 4 Knight Capital Group, which
recently agreed to be bought for $1.4 billion by Getco Holding
Co, will lay off 5 percent of its global workforce as part of
efforts to restructure the automated trading firm, according to
a regulatory filing released on Monday.
Knight said it expects to incur a pretax charge between $9
million and $11 million in the first quarter as a result of
combining its voice and electronic sales teams and winding down
its correspondent clearing operations. It expects additional
costs related to the winding down of the correspondent clearing
unit, but said the costs could not be immediately determined.
A spokesman for Knight said the company had no comment
beyond the filing.
Knight had 1,524 full-time employees as of year-end, up from
1,423 a year earlier, mainly due to an acquisition but also from
growth in its reverse mortgage origination business and in
market making - matching buy and sell orders in stocks and
The company was forced to take on additional investors and
re-examine its entire business following a software problem in
August that led to millions of unintentional orders flooding
into the market over a 45-minute period, leaving Knight with a
huge position it had to unload at a loss of $461.1 million.
Following the glitch, Knight secured $400 million in rescue
financing - in exchange for a more than 70 percent stake in the
company - from a group of investors that included Chicago-based
Getco and was led by Jefferies Group Inc.
Jefferies later helped finance Getco's proposed acquisition
of Knight, which is expected to close in the first half of 2013.
Knight announced the restructuring in January when it
released its fourth-quarter results, but did not provide details
on how many people would be laid off or how much it would cost
Under the reorganization, David Lehmann, head of electronic
execution services, will leave the firm, Knight said last month.
The institutional equities sales team will be jointly led by
Joseph Mazzella, head of institutional equities, and Albert
Maasland, head of international.
Steven Sadoff, head of correspondent clearing services, will
leave the firm as of March 31.
Knight said on Monday all employees directly affected by the
cuts have been notified.
Knight cut about 6 percent of its workforce, mostly from its
voice brokerage business, in August 2011 in an effort to cut
costs and improve profitability amid lower market volumes.
Shares of Knight closed down 1.1 percent at $3.68 on Monday.
The day before Knight's Aug. 1 glitch, its shares closed at