Citigroup: Financial Winner
In its unusually colorful regulatory order, the New York State Department of Financial Services said that after Standard Chartered Bank's CEO for the Americas sent a "panicked message to the Group Executive Director in London" saying that the bank's business with Iran needed "urgent reviewing at the Group level to evaluate if its returns and strategic benefits are . . . still commensurate with the potential to cause very serious or even catastrophic reputational damage to the Group," the Group Director "caustically replied: 'You f---ing Americans. Who are you to tell us, the rest of the world, that we're not going to deal with Iranians.'"
Of course, the Group Director may have forgotten that the Iranian transactions in question were being funneled through the United States.
Extreme volatility continued for Knight Capital Group (KCG) , with shares plunging over 24% to close at $3.07, after the Jersey City, N.J., market maker and facilitator of electronic transactions announced that a group of investors -- including Jefferies Group (JEF) , Blackstone (BX) , Getco, Stephens, Stifel Financial (SF) and TD Ameritrade (AMTD) -- had "agreed to purchase an aggregate of $400 million of 2% convertible preferred stock," which "will be convertible into approximately 267 million shares of common stock of the Company."
The conversion price is $1.50 a share, with the deal likely handing the investor group 70% of Knight Capital Group's common shares.
Knight Capital's shares had declined 63% on Thursday, after the company announced a pretax loss of $440 million caused by glitches in its trading software on Wednesday, which left the company with "at least $4.5 billion worth of securities it hadn't planned to buy," according to a Wall Street Journal report. The Journal also reported that Goldman Sachs (GS) stepped in to buy the unwanted securities from Knight to escape the erroneous trading positions and announce the loss.
The shares then bounced back 57% on Friday, to close at $4.05, after the company secured a credit line allowing it to continue operating for another day.