GO
Loading...

BREAKING NEWS FROM CNBC’S KATE KELLY: GOLDMAN SACHS CHARGED KNIGHT $440M FOR UNWIND

Erin Kitzie
Friday, 3 Aug 2012 | 1:54 PM ET

WHEN: TODAY, FRIDAY, AUGUST 3, 2012

WHERE: CNBC’S “POWER LUNCH

Following is the unofficial transcript of breaking news from CNBC’s Kate Kelly. All references must be sourced to CNBC.

KATE KELLY: WELCOME BACK TO "POWER LUNCH" I’M KATE KELLY AT HEADQUARTERS WITH SOME BREAKING NEWS ON KNIGHT TRADING GROUP. KNIGHT TRADING GROUP, AS YOU KNOW, ENTERED INTO THESE ERRONEOUS TRADES ON WEDNESDAY AND WHEN THEY UNWOUND THEM AFTER THE BELL THAT NIGHT, THEY DID SO WITH GOLDMAN SACHS. GOLDMAN SACHS TOOK THE OTHER SIDE OF THAT TRADE. ESSENTIALLY, HELPING KNIGHT SELL OFF THOSE ACCIDENTAL PURCHASES OF ABOUT 150 STOCKS AND THAT IS WHAT RESULTED IN THE 440 MILLION DOLLAR CHARGE I’M BEING TOLD. IN OTHER WORDS, GOLDMAN SACHS HAS BEEN MENTIONED AS A POSSIBLE ADVISOR TONIGHT AS THEY TRY TO SEEK CASH OR A POSSIBLE DEAL. SOMETHING TO HELP THEM GET OUT OF THIS CASH CRUNCH THAT THEY ARE CURRENTLY IN AS A RESULT OF THESE ERRONEOUS TRADES. BUT AS WELL, GOLDMAN SACHS PLAYED AN UNSEEN PART IN HELPING TO UNWIND THESE ERRONEOUS TRADES ON WEDNESDAY AND IN THREE DAYS TIME BECAUSE OF T+3 SETTLEMENT RULES, KNIGHT IS GOING TO HAVE TO COME UP WITH THE MONEY TO PAY GOLDMAN. SO THAT WOULD BE MONDAY NIGHT THAT KNIGHT WILL HAVE TO PAY GOLDMAN 440 MILLION DOLLARS. THERE ARE QUESTIONS I’M TOLD AS TO WHETHER OR NOT KNIGHT WILL BE ABLE TO COME UP WITH THAT CASH. THE DEAL IS STILL A LITTLE BIT FLUID, THEY REACHED THIS AGREEMENT ON WEDNESDAY NIGHT IN PRINCIPLE, BUT WHETHER OR NOT IT GOES THROUGH, KIND OF DEPENDS ON WHETHER KNIGHT CAN SORT OF SECURE ITS CASH POSITION. THEY HAVE THE WEEKEND AND THEY HAVE MONDAY TO KIND OF FIGURE THINGS OUT IN ORDER TO MAKE THIS AGREEMENT WITH GOLDMAN SACHS AN OFFICIAL ONE.

About CNBC:

With CNBC in the U.S., CNBC in Asia Pacific, CNBC in Europe, Middle East and Africa, CNBC World and CNBC HD+, CNBC is the recognized world leader in business news providing real-time financial market coverage and business information to more than 395 million homes worldwide, including more than 100 million households in the United States and Canada. CNBC also provides daily business updates to 400 million households across China. The network's 16 live hours a day of business programming in North America (weekdays from 4:00 a.m. - 8:00 p.m. ET) is produced at CNBC's global headquarters in Englewood Cliffs, N.J., and includes reports from CNBC News bureaus worldwide. CNBC.com and CNBC Mobile Web (mobile.cnbc.com) offer real-time stock quotes, charts, analysis and video.

Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://www.nbcumv.com/mediavillage/networks/cnbc/