Knight Capital gets $400M rescue

Knight Capital Group survived a near-death experience Monday, lining up Wall Street firms to lend it badly needed cash after the brokerage lost $440 million last week when a malfunction in its trading system flooded the market with erroneous trades.

But the $400-million rescue had a steep price for existing shareholders: control of the firm. And it's still not certain Knight will make it through the episode intact.

The new investors will gain a 73 percent stake in the company and three board seats. But Knight, which has removed the problem software and is still investigating what went wrong, faces a difficult task of rebuilding trust with clients and persuading regulators Wednesday's disaster was an anomaly. Its stock has plunged 70 percent since last Tuesday.

"This is an isolated situation," CEO Thomas Joyce said on CNBC Monday. "We screwed up. We paid the price."

All weekend, speculators wondered if Knight would be able to open for business Monday. The technical glitch briefly sent dozens of stocks swinging wildly last week and left Knight responsible for many of the shares its computers accidentally ordered. The company had to drain its capital to cover the erroneous trades.

The rescuers are Blackstone Group LP, rival brokerage Getco and financial services firms TD Ameritrade Holding Corp., Stifel Nicolaus, Jefferies Group Inc. and Stephens Inc.-- AP, Reuters