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Knight Capital Adds Rescuers To Board: TD Ameritrade's Tomczyk, Blackstone's Brand

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Earlier this month, after a $440 million debacle quickly dubbed the "Knightmare On Wall Street," trading firm Knight Capital Group found itself in desperate need of a lifeline. Now, three of the companies that chipped in to provide that rescue are adding representatives to the company's board.

Knight named three new directors with substantial investing and markets experience Tuesday: Fred Tomczyk, 56, Chairman and CEO of TD Ameritrade; Martin Brand, 37, managing director at Blackstone Group; and Matthew Nimetz, 73, advisory director at General Atlantic.

The trio join the board under the terms of the Aug. 6 transaction, a $400 million injection into the firm led by Jefferies Group that also included participation from TD Ameritrade, Blackstone, Getco (of which General Atlantic is the controlling investor), Stephens and Stifel Financial. The investors agreed to purchase convertible preferred shares that, if converted, give the group a 73% stake in Knight in return for their financial commitment. (See "For Knight Capital, Survival Doesn't Come Cheap.")

Blackstone and General Atlantic were each given the right to appoint one new board member, with the third, apparently Tomczyk, selected by the current board subject to Jefferies' approval.

"Knight is pleased to add individuals with such deep and varied expertise to the Board of Directors," said Knight's Chairman and Chief Executive Tom Joyce. "Martin, Matt and Fred understand the simple yet powerful draw of Knight's deep liquidity, high-quality trade executions and low execution costs."

The electronic trading that allows Knight to provide such services has proven to be a double-edged sword. A flawed algorithm being put into practice Aug. 1 led to wild trading in more than 100 NYSE-listed stocks, leaving Knight saddled with millions of dollars in shares it did not want and could not exit without heavy losses. Goldman Sachs reportedly helped Knight dump the trades, for a fee of course. (See "Here's Why Goldman Sachs May Have Helped Knight Capital.")

Shares of Knight, which had been a vocal critic of Nasdaq's botched handling of the May Facebook IPO until it was beset by its own problems earlier this month, inched up 0.2% to $2.79 Tuesday. Volume has been minimal, understandably, since the investor group took what amounts to a majority stake upon conversion of the preferred shares. Before the trading blunder shares went for more than $10 apiece.

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