An irreverent Wall Street Blog
by Bill Singer
Join BrokeAndBroker blog on Facebook  Follow the BrokeAndBroker blog on Twitter  Connect with BrokeAndBroker on LinkedIn  Join Bill Singer on Google+  Subscribe to RSS Feed

Knight Unhorsed And NASDAQ's Greifeld May Be Smiling
Written: August 1, 2012

NEW YORK, NY - MAY 18:  The Nasdaq board in Ti...

NASDAQ's Times Square board advertises the Facebook IPO -- just before the air came out of that balloon. 

On May 6, 2010, the Dow Jones Industrial Average took a roller coaster of an unplanned ride when it plummeted some 1000 points, only to recover within minutes. Dubbed the “Flash Crash,” this terrifying free-fall and skyrocket recovery unnerved market participants – not so much because it happened but because, even to this day, no one really has a satisfying explanation about what exactly went wrong or how to ensure that there is no recurrence.

At best, we have resorted to rabbits feet and crossed fingers (but let’s be careful, folks, about the dreaded Fat Finger). And while we have implemented a new system of both market and individual stock circuit breakers, that’s more of a hoped-for safety net rather than a comprehensive set of policies and procedures to prevent market disruptions caused by computer code corruption or server crashes.  Remember the old days when markets moved in response to news?

On March 23, 2012, BATS went batty as the Better Alternative Trading System didn’t prove to be all that better and effectively seized up during the NASDAQ morning open, prompting a trading halt. Foolishly, many thought that after the Flash Crash that this kind of market mayhem wouldn’t recur — so much for the false assurance of the regulatory bandages.

Of course, who can forget May 18, 2012, when NASDAQ’s much heralded launch of the greatly anticipated Facebook initial public offering wound up in the toilet. After taking some time to first remove the ample amount of egg on their faces, the good folks at NASDAQ seemed to concede that they weren’t quite prepared for what many viewed as the single-most important IPO launch in that electronic market’s history. The Facebook IPO crash and burn is now attributed to some software glitches – whatever that truly means.  The price of Facebook continues to drop as the talk of litigation against NASDAQ seems to rise.

Hubris 101

As the piling-on of NASDAQ grew after the disastrous opening day, who can forget the no-holds-barred criticism of NASDAQ’s Facebook IPO performance by Knight Capital’s Chair and CEO Thomas Joyce ? It was only a few weeks ago, on May 21, 2012, when Joyce appeared on CNBC “Squawk On The Street” and slammed NASDAQ:

First of all, I want to point out that this wasn’t in anyway, shape or form an industry failure. This is not a systemic issue. All of the financial services firms that were out there handling client flow handled it perfectly. This is not the first IPO that’s ever come down the pipe. They understand the process and handled it perfectly. The failure was Nasdaq’s. It was Nasdaq’s failure . . .

[T]his was a technology problem. This was like a server going down except on a massive scale and instead of stepping back and rebooting, they kept plowing ahead. . .


It must be with some devilish joy that the folks at NASDAQ watch today’s unfolding developments as Knight itself experienced severe disruption of its ability to handle and transmit orders. A situation so severe that the company’s stock is down nearly 33%. We’re told, preliminarily, that there’s a software glitch that impacted order routing. Ah yes, the ever-popular high-tech scapegoat: the software glitch!

How happy some folks at NASDAQ must be as they smile and wink at their CEO Bob Greifeld. Is he sharpening his rhetorical knives for a slice and dice job of loudmouth Joyce?  Will Greifeld soon issue a statement that Knight’s failure today is not indicative of an industry or systemic failure but simply a failure of Knight.

Let the games begin.

Mary Maalox Schapiro

When y’all done, would someone please telephone Mary Schapiro at the Securities and Exchange Commission and see if that poor beleaguered woman has any stomach lining left to handle yet another industry schoolyard fight.  And while Mary is separating all the little boys and their market toys, perhaps she will be able to find the resources to figure out why Knight melted down today — and why our markets keep getting betrayed by software glitches and trading system failures.



Previous Entries
April 18, 2014
We just made it through another tax season. The good news is that you filed and are fully paid up -- or, the bad news is that you didn't file or you h... Read On
April 17, 2014
In this digital age there are still folks who physically cut-and-paste. How quaint. Of course, quaint or not, when you start using the terms "cut-and-... Read On
April 16, 2014
Here's an interesting cocktail of facts: an IRA, a mother, powers of attorney, and a stockbroker son. Add into that mix questions about whether a $60,... Read On
April 15, 2014
Stockbroker, Compliance, Legal, and Regulatory JobsFor a full listing of current job openings, visit the BrokeAndBroker Employment Page ... Read On
April 14, 2014
Auction Rate Securities are the unwanted gift that keeps on giving. In today's Blog, we report about yet another bit of collateral ... Read On
April 12, 2014
Citicorp Loses Bizarre Motion To Compel Class Action ArbitrationApril 11, 2014As part of the terms of his employment, former Citicorp Credit Services,... Read On Job Search
Related Topics
Tag Cloud
Internet FINRA Bear Stearns Bloomberg SEC NASD NYSE Money Laundering Due Diligence Waiver Forbes China Chepucavage Broy Woody Allen Madoff NAC NPR Marketplace Stanford UBS Ketchum Antitrust NASDAQ RRBDLAW Schapiro Bill Singer BrokerAndBroker USERRA Morgan Keegan Arbitration Khuzami BrokeAndBroker Aleynikov Goldman Sachs brokeandbroker Promissory Note U4 Bill SInger EFL CFTC Huffington Post Flash Crash arbitration RBC Ponzi Affinity Fraud Wachovia Raymond James Expungement Fraud Securities Fraud Outside Business Activity Registered Rep Magazine FOREX FBI Banc of America Pro Se Supreme Court Morgan Stanley Smith Barney E*Trade Margin email Galleon Penson U5 Defamation Protocol Wells Fargo Punitive Damages Citigroup Merrill Lynch ARS Employee Forgivable Loan Street Legal Morgan Stanley AWC Fidelity Bankruptcy Broke And Broker HFT David Sobel Day Trading Ameriprise Commissions Spouse Schwab CRD Kenneth Starr IRS CNBC Complaint ATM Skimming Hacking Phishing Malware Naskovets Poteroba Koval Lincoln Financial Selling Away Outside Business Activities Rakoff 2nd Circuit Second Circuit IRA 401k Forgery Tax Email Netschi Moore Whistleblower Street Sweeper Tran Bharara Facebook Online Severance Bonus Eligibility Rule TD Ameritrade Hedge Fund SAC 1099 Smith Barney Lehman Brothers IC3 Scottrade Lehman JPMorgan Chase Hertz Insider Trading Bank of America Elles Bribe Auction Rate Securities Raiding Spam Edward Jones Medicare Diabetes Dow Schumer Walter Bid Rigging Real Estate Discrimination Wall Street Statutory Disqualification Form U4 Form U5 Indictment Boyland DOJ Corruption bill singer FTC Do Not Call FINRA Arbitration Costa Rica Settlement LIBOR Varney Plea Rule 8210 RRBDlaw Appeal Fowler LPL Johnson US Airways Reg D MSSB Vault Loan SunTrust Discovery Employment Rosenthal Recruiting Lawyer Trading Platform JP Morgan Employment Tuesday Wrongful Termination Bank Guarantee WaMu Solicitation REIT Martin Credit Cards Away Account Credit Repair PN Advisor Placement Group Forex Mortgage Private Placement Moon Merrill Anderson Exam Lee Borrowing Tax Lien Conversion Oppenheimer Wedbush Felony Misdemeanor Expenses ING Lien OTR Estate Jobs Florida Credit Card Elderly Flash Drive Annuity FNMA BrokeAndBroke TIC DWI Promissory Notes Suitability Will POA Power of Attorney Casino NSF MF Global Counterfeit Preet Bharara Corzine Hacker Prison NASAA Aguilar FCPA Identity Theft Gold Dell Bar Injunction Bank Deutsche Bank God HSBC Private Placements Eric Stein Wire Fraud CCO Joshua Brown Backstage Wall Street Obstruction of Justice Retaliation Variable Annuity Outside Account Options Telephone Wine Social Media ADA Pacifico Non-Prosecution Agreement Confirm Tax Fraud Retirement OBA Equity Indexed Annuities EIA MetLife Continuing Education Impersonation Annuities BBVA Business Expenses OIP ETF JOBS Act Mail Fraud Parking Variable Annuities Signatures BitTorrent Wire Transfer Wire Crowdfunding Nasdaq Away Accounts WSP Laptop Dodd Frank Checks PST Solicited Unsolicited Congress SRO Wife Discretion Non-Solicitation Restaurant Commodities Private Securities Transaction Offer of Settlement employment jobs Great Recession Chase Investment Services Barclays Willful Apple Time And Price T&P Husband Letter of Authorization LOA Knight Test Practice Sale Unfair Competition Signature Judgments Undisclosed Settlement Trainee Fee Trust Laser Side Bar Mattera Female Sales Assistant Kennedy Argentina Judgment Bank Fraud TSSB Trustee Frumento 6th Circuit Proctor Beneficiary NYAG Schneiderman Gallagher White Compromise Website Supervision Piwowar Tax Liens signature VA
Email Bill Singer Connect with Bill Singer on Facebook Follow Bill Singer on Twitter Link up with Bill Singer on LinkedIn Join Bill Singer on Google+