SEC v. Knight Securities, L.P.

On December 16, 2004, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings, Making Findings, and Imposing Remedial Sanctions Pursuant to Sections 15(b)(4) and 21C of the Securities Exchange Act of 1934 ("December 16 Order") against Knight and ordered, among other things, Knight to pay disgorgement of $41,146,663.50, prejudgment interest of $13,195,068.00, and a civil money penalty of $12,500,000.00 to the Commission and acknowledged that Knight shall also pay a fine of $12,500,000.00 to the NASD in a related proceeding.

On December 20, 2004, pursuant to the December 16 Order, an interest bearing escrow account was opened at JP Morgan Chase Bank, N.A. ("JP Morgan") pursuant to an escrow agreement. On December 29, 2004, Knight deposited into the JP Morgan escrow account the disgorgement amount, pre-judgment interest and civil money penalty ("Distribution Funds") totaling $66,841,731.50. On October 27, 2005, pursuant to a Commission Order dated September 29, 2005, the Distribution Funds were transferred from the JP Morgan escrow account to the Commission's Deposit Fund account at the Treasury's Bureau of Public Debt ("BPD") pending the distribution of the funds. The Distribution Funds were deposited at the BPD for investment in government obligations.

Pursuant to Section VI.C.6.a. of the December 16 Order, Knight agreed to retain an Independent Distribution Consultant to develop a Plan for the distribution of the Distribution Funds. Knight retained, and the Commission did not object to the retention of, Heffler, Radetich & Saitta, L.L.P. ("Heffler") as the Independent Distribution Consultant. Pursuant to Rule 1105(a) of the Rules, the Commission staff proposes that Heffler administer the Plan once the Plan has been approved by the Commission. The Commission staff proposes that the bond requirement of Rule 1105(c) of the Rules be waived by the Commission for good cause shown – specifically, that the Distribution Funds will be held at the BPD pending distribution. The fees and costs incurred by Heffler in developing and administering the Plan for distribution in this matter will be the responsibility of Knight and will not be paid from the Distribution Funds.

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