Financial stocks rallied on Friday after better-than-expected U.S. jobs data, with shares of Knight Capital Group Inc. rebounding after two sessions of steep declines. Shares of Knight Capital KCG +56.98% climbed 57% to $4.05 on Friday.
The Wall Street Journal, citing unnamed sources, reported on Friday that Knight has received a mystery credit line that will allow it to operate for the day. A representative from Knight couldn’t immediately be reached for comment.
U.S. Securities and Exchange Commission Chairman Mary Schapiro said Friday said that the erroneous trades leading to a $440 million loss at Knight Capital Group Inc. were “unacceptable” and the SEC is investigating whether the firm followed a requirement to check its systems thoroughly before using them in the markets.
Knight’s shares tumbled in the previous two sessions. They had closed Tuesday trading at $10.33. Knight said Thursday that exiting erroneous trading positions cost it $440 million, raising concerns about its capital position. The erroneous trades had been caused by a glitch in the installation of trading software on Wednesday morning.
Some people made billions of this. It’s all smoke and mirrors. They sold off Tuesday and now have “credit” from someone, bought back in cheap and turned into a winner.