Wall Street's latest disaster is the trading firm Knight Capital (KCG), which somehow managed to lose hundreds of millions of dollars in a half hour last week from a "software glitch"--a capital loss that almost destroyed it.
Knight has now received an emergency investment of $400 million from a group of investors including TD Ameritrade, Blackstone Group and Chicago-based Getgo. These new investors will own 70 percent of Knight Capital.
This injection will allow the firm to keep operating, but between last week's losses and the additional dilution from today's investment, Knight shareholders have been pretty much wiped out. The deal will more than triple the number of shares outstanding, massively diluting current shareholders' stake in the firm.
The stock is down 70 percent in the last five days.
"Clearly, we're not happy with how it played out," said Knight Capital CEO Tom Joyce on CNBC Monday morning, adding the firm got the best deal is couldRead More »from Knight Capital Implosion: The Latest Wall Street Alarm Bell That Everyone Will Ignore