Knight Capital Group to cut workforce by 5 percent
(Reuters) - 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 options.
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 the firm.
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 August 1 glitch, its shares closed at $10.33.
(Reporting by John McCrank; Editing by Phil Berlowitz)
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