As filed with the Securities and Exchange Commission on July 20, 2000
Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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KNIGHT TRADING GROUP, INC.
(Exact name of Registrant as specified in its charter)
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Delaware 6211 22-3689303
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation Industrial Classification Identification
or organization) Code Number) Number)
Newport Tower, 29th Floor
525 Washington Boulevard
Jersey City, New Jersey 07310
(201) 222-9400
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
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Michael T. Dorsey, Esq.
Senior Vice President and General Counsel
Knight Trading Group, Inc.
Newport Tower, 23rd Floor
525 Washington Boulevard
Jersey City, New Jersey 07310
(201) 222-9400
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
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Copy to:
Matthew J. Mallow, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036-6522
(212) 735-3000
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Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. |X|
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================
Title of each class Proposed Maximum Proposed Maximum Amount of
of securities to be Amount to be Offering Price Aggregate Registration
registered Registered Per Share(1) Offering Price(1) Fee
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<S> <C> <C> <C> <C>
Class A Common Stock,
par value $.01 per share 2,500,000 shares $33.875 $84,687,500 $22,357.50
====================================================================================================
</TABLE>
(1) Pursuant to Rule 457(c), the proposed maximum offering price per
share and the proposed maximum aggregate offering price have been
calculated on the basis of $33.875 per share, the average of the high
and low prices of the Class A common stock on the Nasdaq Stock Market
on July 17, 2000.
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The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Securities and
Exchange Commission, acting pursuant to said Section 8(a), may determine.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS
IS NOT AN OFFER TO SELL SECURITIES, AND WE ARE NOT SOLICITING OFFERS TO BUY
THESE SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JULY 20, 2000
KNIGHT TRADING GROUP, INC.
2,500,000 SHARES
CLASS A COMMON STOCK
This prospectus relates to the resale to the public that may be made
from time to time by the selling stockholders named in this prospectus of
up to 2,500,000 shares of our Class A common stock.
The selling stockholders will receive all of the proceeds from the
sale of the shares. We will not receive any of the proceeds from the sale
of shares by the selling stockholders.
Our Class A common stock is traded on the Nasdaq Stock Market under
the symbol "NITE." The last reported sale price of our Class A common stock
on the Nasdaq Stock Market on July 17, 2000 was $32.625 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 6.
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THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES
REGULATORS HAVE NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED
IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is July 20, 2000.
We have not authorized any person to make a statement that differs
from what is in this prospectus. If any person does make a statement that
differs from what is in this prospectus, you should not rely on it. This
prospectus is not an offer to sell, nor is it seeking an offer to buy,
these securities in any state in which the offer or sale is not permitted.
The information in this prospectus is complete and accurate as of its date,
but the information may change after the date.
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TABLE OF CONTENTS
PAGE
KNIGHT TRADING GROUP, INC....................................................5
RISK FACTORS.................................................................6
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS............................17
USE OF PROCEEDS.............................................................17
SELLING STOCKHOLDERS........................................................17
PLAN OF DISTRIBUTION........................................................18
WHERE YOU CAN FIND MORE INFORMATION.........................................19
INCORPORATION BY REFERENCE..................................................19
LEGAL MATTERS...............................................................20
EXPERTS.....................................................................20
KNIGHT TRADING GROUP, INC.
Knight Trading Group, Inc., through its subsidiaries, engages in
market-making and asset management businesses. Knight Securities, L.P.
makes markets in over-the-counter equity securities, primarily those traded
in The Nasdaq Stock Market and on the OTC bulletin board of the National
Association of Securities Dealers, Inc. Knight Capital Markets, Inc. makes
markets in New York Stock Exchange-and American Stock Exchange-listed
equity securities in the over-the-counter market known as the Nasdaq
InterMarket. Knight Financial Products makes markets in options on
individual equities, equity indices, fixed income instruments and some
commodities in the United States and in Europe. We also operate an asset
management business for institutional investors and high net worth
individuals through our Deephaven subsidiaries. Knight Securities, Knight
Capital Markets and Knight Financial Products LLC are registered as
broker-dealers with the Securities and Exchange Commission. Additionally,
Knight Securities and Knight Capital Markets are members of the National
Association of Securities Dealers, Inc.
Our principal executive offices are located at Newport Tower, 29th
Floor, 525 Washington Boulevard, Jersey City, New Jersey 07310 and our
telephone number is (201) 222-9400.
RISK FACTORS
You should consider carefully the following risks before you decide
to buy our common stock. The risks and uncertainties described below are
not the only ones facing our company. Additional risks and uncertainties
not presently known to us may also adversely impact our business
operations. If any of the following risks actually occur, our business,
financial condition or operating results could be materially adversely
affected. In such case, the trading price of our common stock could
decline, and you may lose all or part of the money you paid to buy our
common stock.
OUR BUSINESS IS HIGHLY VOLATILE AND OUR QUARTERLY RESULTS MAY
FLUCTUATE SIGNIFICANTLY.
We have experienced a significant increase in our trading volume in
the past years since our incorporation. We believe that this increase in
trading volume has been due largely to a high level of retail demand for
Internet and technology-related securities by on-line investors. This
demand has resulted in unprecedented fluctuations and volatility in
Internet and technology-related securities. These fluctuations have had a
direct impact on our operating results and have, on occasion, caused
significant fluctuations in our intra-day profitability. As a result, we
have implemented certain operational controls to manage these fluctuations
better. However, we cannot assure you that the operational controls we have
implemented will manage these fluctuations effectively. We cannot assure
you that the volatility in Internet and technology-related securities will
not continue. Moreover, the continued volatility in the securities markets,
particularly in Internet and technology-related securities, could result in
significant trading losses. These losses could have a material adverse
effect on our business, financial condition and operating results.
Our operating results may fluctuate significantly in the future
because of a number of other factors, including:
o changes in the value of our securities positions and our
ability to manage related risks;
o changes in the volume of order flow and our market-making
activities;
o volatility in the securities markets;
o our ability to manage personnel, overhead and other expenses;
o changes in payments for order flow;
o changes in execution fees and clearance fees, which are fees we
pay to our clearing brokers;
o the addition or loss of sales and trading professionals;
o regulatory changes and compliance issues;
o the amount and timing of capital expenditures;
o costs associated with acquisitions; and
o general economic conditions.
Our expense structure is based on historical expense levels and the
levels of demand for our market-making services. If demand for our
services declines and we are unable to adjust our cost structure on a
timely basis, our business, financial condition and operating results may
be materially adversely affected. We have experienced, and may experience
in the future, significant variations in our business from season to
season. Historically, we have experienced an increase in revenues in the
fourth quarter of the year. We believe this is due largely to higher
trading volumes in the securities markets at year end. We believe that this
seasonal trend will continue for the foreseeable future and that our
business, financial condition and operating results may be affected by this
trend.
Due to these factors, period-to-period comparisons of our revenues
and operating results are not necessarily meaningful. You should not rely
on these comparisons as indicators of our future performance. We also
cannot assure you that we will be able to:
o sustain the rates of revenue growth we have experienced in the
past;
o improve our operating results; or
o sustain our profitability on a quarterly basis.
In addition, our operating results in future periods may be below the
expectations of securities analysts and investors. In that event, the
market price of our common stock would be materially and adversely
affected.
WE ARE SUBJECT TO RISKS ASSOCIATED WITH THE SECURITIES INDUSTRY
GENERALLY.
The securities industry has undergone several fundamental changes as
a result of:
o the emergence of on-line discount brokers;
o the increased prominence of on-line retail investors;
o the increased prominence of institutional investors;
o consolidation among firms in the securities industry;
o new regulations at the federal and state level; and
o the increased use of technology.
These changes have resulted in an increase in the volume of equity
securities traded in the U.S. equity markets and a general decrease in the
spreads between bid and ask, or buy and sell, prices. We cannot assure you
that the spreads market makers receive for execution of trades in equity
securities will not continue to decrease in the future. We derive a
substantial portion of our revenues from market-making activities relating
to Nasdaq securities. In the past, Nasdaq has taken regulatory actions to
reduce spreads between bid and ask prices for securities. Based on
initiatives taken by the SEC, we anticipate that decimal pricing will
commence in certain markets in the fall of 2000. This date is subject to
possible delay due to technological constraints in the various market
centers. We expect that spreads will decline further when Nasdaq and the
various exchanges move to quoting securities in decimals rather than in
fractions. If there is any further decline in the spreads that market
makers receive in trading equity securities, our business, financial
condition and operating results may be materially adversely affected.
Although we derive most of our revenue from trading in existing
securities, our volume of market-making activities also depends on the
number and size of new equity offerings. By increasing the number and
volume of securities available for trading, new offerings increase the
potential for secondary market trading activity. However, the market for
equity offerings historically has experienced significant volatility not
only in the number and size of equity offerings, but also in the secondary
market trading volume and prices of newly-issued securities. The number and
size of equity offerings may decline during periods of market uncertainty.
This decline might be caused by concerns over inflation, rising interest
rates, other economic issues and a reduction in cash flows by mutual funds
and other institutional and retail investors into the U.S. equity markets.
The recent demand for new equity offerings has been driven in part by
mutual funds and other institutional and retail investors. Any reduction in
revenues resulting from a decline in the number and size of new equity
offerings or the secondary market trading volume for these offerings could
have a material adverse effect on our business, financial condition and
operating results. Additionally, a decline in cash flows into the U.S.
equity markets or a slowdown in investment activity by mutual funds and
other institutional and retail investors may have an adverse effect on the
securities markets generally and could result in lower revenues from our
market-making activities.
The securities business is also subject to various other risks,
including customer default, employees' misconduct, errors and omissions and
litigation. Losses associated with these risks could have a material
adverse effect on our business, financial condition and operating results.
WE MAY HAVE DIFFICULTY MANAGING OUR GROWTH.
Since we commenced operations in 1995, we have experienced
significant growth in our business activities and the number of our
employees. The growth of our business has placed a significant strain on
our management and operations and we expect it to continue to do so in the
future. This growth has required and will continue to require us to
increase our investment in management personnel, financial and management
systems and controls, and facilities. In the absence of continued revenue
growth, the costs associated with our expected growth would cause our
operating margins to decline from current levels. In addition, as is common
in the securities industry, we are and will continue to be highly dependent
on the effective and reliable operation of our communications and
information systems. In the past, we have experienced occasional
difficulties with the performance of our systems during periods of
abnormally high volumes of market activity. While we have implemented a
number of measures to address these difficulties, we cannot assure you that
we will not experience similar difficulties in the future. If we experience
similar difficulties in the future, our business, financial condition and
operating results could be materially adversely affected.
We believe that our growth will require implementation of new and
improved communications and information systems. In addition, the scope of
procedures for assuring compliance with applicable rules and regulations
has changed as the size and complexity of our business has increased. In
response, we have implemented and continue to revise formal compliance
procedures. Our future operating results will depend on our ability to
continue:
o to improve our systems for operations, financial control, and
communication and information management;
o to refine our compliance procedures and enhance our compliance
oversight; and
o to recruit, train, manage and retain our employee base.
We cannot assure you that we will be able to manage our growth
successfully. Our inability to do so could have a material adverse effect
on our business, financial condition and operating results.
WE DEPEND SUBSTANTIALLY ON OUR MARKET-MAKING ACTIVITIES.
We derive substantially all of our revenues from market-making
activities. We expect our market-making activities to continue to account
for substantially all of our revenues for the foreseeable future. Any
factor adversely affecting market-making in general, or our market-making
activities in particular, could have a material adverse effect on our
business, financial condition and operating results. Our future success
will depend on:
o continued growth in demand for our market-making services;
o our ability to respond to regulatory and technological changes;
and
o our ability to respond to customer demands.
If demand for our market-making services fails to grow, grows more
slowly than we currently anticipate, or declines, our business, financial
condition and operating results would be materially and adversely affected.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION.
The securities industry is subject to extensive regulation under both
federal and state laws. In addition, the SEC, the NASD, other
self-regulatory organizations, commonly referred to as SROs, and state
securities commissions require strict compliance with their respective
rules and regulations. These regulatory bodies are responsible for
safeguarding the integrity of the securities markets and protecting the
interests of participants in those markets. As a market maker, we are
subject to regulation concerning certain aspects of our business,
including:
o trade practices;
o capital structure;
o record retention;
o net capital requirements; and
o the conduct of our directors, officers and employees.
Broker-dealers, including Knight Securities, Knight Capital Markets
and Knight Financial Products, are required to notify the SEC prior to
repaying subordinated borrowings, paying dividends and making loans to
their parents, affiliates or employees, or otherwise entering into
transactions which, if executed, would result in a reduction of 30.0% or
more of their excess net capital (net capital less minimum requirement).
Failure to comply with any of these laws, rules or regulations could
result in adverse consequences. We, and certain of our officers and
employees, have, in the past, been subject to claims arising from acts in
contravention of these laws, rules and regulations. These claims have
resulted in the payment of fines and settlements. We cannot assure you that
we and/or our officers and other employees will not, in the future, be
subject to similar claims. An adverse ruling against us and/or our officers
and other employees could result in us and/or our officers and other
employees being required to pay a substantial fine or settlement and could
result in suspension or expulsion. This could have a material adverse
effect on our business, financial condition and operating results.
The regulatory environment in which we operate is subject to change.
New or revised legislation or regulations imposed by the SEC, other United
States or foreign governmental regulatory authorities, SROs or the NASD
could have a material adverse effect on our business, financial condition
and operating results. Changes in the interpretation or enforcement of
existing laws and rules by these governmental authorities, SROs and the
NASD could also have a material adverse effect on our business, financial
condition and operating results.
Additional regulation, changes in existing laws and rules, or changes
in interpretations or enforcement of existing laws and rules often directly
affect securities firms. We cannot predict what effect any such changes
might have. Our business, financial condition and operating results may be
materially affected by both regulations that are directly applicable to us
and regulations of general application. Our level of trading and
market-making activities can be affected not only by such legislation or
regulations of general applicability, but also by industry-specific
legislation or regulations.
Our business, both directly and indirectly, relies on the Internet
and other electronic communications gateways. We intend to expand our use
of these gateways. To date, the use of the Internet has been relatively
free from regulatory restraints. However, the SEC, SROs and some states are
beginning to address the regulatory issues that may arise in connection
with the use of the Internet. Accordingly, new regulations or
interpretations may be adopted that constrain our and our customers'
ability to transact business through the Internet or other electronic
communications gateways. Any additional regulation of the use of such
gateways could have a material adverse effect on our business, financial
condition and operating results.
WE FACE RISKS ASSOCIATED WITH OUR INTERNATIONAL EXPANSION.
We have recently formed and acquired subsidiaries in the United
Kingdom and established a joint-venture in Japan in anticipation of
expanding our operations internationally. To expand our services in these
countries and other foreign countries, we will have to comply with
regulations of each country in which we conduct business. We may in the
future expand our business to other countries. However, we currently have
limited experience in operating our business internationally. The brokerage
industry in many foreign countries is heavily regulated. The compliance
requirements of these different regulatory jurisdictions may limit our
ability to expand internationally. We cannot assure you that we will be
successful in obtaining the necessary regulatory approvals for our
expansion, or, if approvals are obtained, that we will be able to continue
to comply with these regulations. The failure to obtain these approvals or
comply with these regulations could have a material adverse effect on our
business, financial condition and operating results. In addition, there are
other risks inherent in doing business in international markets, including:
o unexpected changes in regulatory requirements;
o potentially adverse tax consequences;
o export restrictions;
o tariffs and other trade barriers;
o difficulties in staffing and supervising foreign operations;
o political instability;
o fluctuations in currency exchange rates; and
o seasonal reductions in business activity during the summer
months in Europe.
Any of the above could have a material adverse effect on the success
of our international operations and, consequently, on our business,
financial condition and operating results.
OUR SUCCESS WILL DEPEND ON THE LEVEL OF MARKET ACCEPTANCE OF NEW
SERVICES, PRODUCTS AND THE INTERNET.
We receive substantially all of our order flow through electronic
communications gateways, including a variety of computer-to-computer
interfaces and the Internet. The market for market-making services that
rely on the Internet is rapidly evolving. As a result, the demand for these
services is subject to a high level of uncertainty. Our electronic services
may involve alternative approaches to market making. Accordingly,
substantial marketing and sales efforts may be necessary to educate
prospective customers about our electronic services and products.
We depend on the business we receive from broker-dealers who
increasingly rely on the Internet to conduct transactions with their
customers. The need for our services and products depends on whether the
customers are willing to adopt the Internet as a medium for commerce and
communication. We believe that there has been a significant growth in the
use of the Internet as a means of trading in securities. However, customer
concerns may negatively affect the growth of Internet use for trading
activities. The success of the Internet will also depend on the development
of necessary infrastructure and complementary services and products, like
high speed modems and high speed communication lines. As the number of
users and the amount of traffic on the Internet continues to increase, we
cannot assure you that the infrastructure needed to support the Internet
will be able to meet the demands placed on it.
In the past, due to the high volume of trading activity, such as in
Internet-related securities, many Internet-based broker-dealers have
experienced delays in executing customers' transactions. Finally, the
success of the Internet will also depend on the ability of Internet users
to develop and adopt new standards and protocols to handle increased levels
of activity. As a result, we cannot assure you that the number of
transactions generated over the Internet will continue to increase. Any
reluctance of the clients of our broker-dealer customers to obtain
brokerage services over the Internet could have a material adverse effect
on our business, financial condition and operating results.
COUNTERPARTIES MAY FAIL TO PAY US; CLEARING BROKERS MAY NOT PERFORM
ADEQUATELY.
As a market maker of over-the-counter and listed stocks, the majority
of our securities transactions are conducted as principal with
broker-dealer counterparties located in the United States. We clear our
securities transactions through unaffiliated clearing brokers. Our clearing
brokers have the right to charge us for losses that result from a
counterparty's failure to fulfill its contractual obligations. Our policy
is to monitor the credit standing of the counterparties with which we
conduct business. However, we cannot assure you any of these counterparties
will not default on their obligations. If any do, our business, financial
condition and operating results could be materially adversely affected. In
addition, at any time, a substantial portion of our assets are held at one
or more clearing brokers. Accordingly, we are subject to credit risk with
respect to these clearing brokers. As of June 30, 2000, our credit
exposures were concentrated with the clearing brokers and our net exposures
amounted to $190 million. Additionally, as of June 30, 2000, the clearing
brokers held, as custodian, securities owned by us with a market value of
$1.4 billion. As a result, we rely on our clearing brokers to discharge
adequately their obligations on a timely basis. We are dependent also on
the solvency of our clearing brokers. Any failure by our clearing brokers
to discharge adequately their obligations on a timely basis or any event
adversely affecting our clearing brokers, could have a material adverse
effect on our business, financial condition and operating results.
WE FACE RISKS ASSOCIATED WITH OUR MARKET MAKING AND TRADING
TRANSACTIONS.
We conduct our market-making activities predominantly as a principal,
which subjects our capital to significant risks. These activities involve
the purchase, sale or short sale of securities for our own account. These
activities are subject to a number of risks, including risks of price
fluctuations and rapid changes in the liquidity of markets.
These risks may limit our ability to either resell securities we
purchase or to repurchase securities we sell in these transactions. In
addition, we may experience difficulty borrowing securities to make
delivery to purchasers to whom we sold short, or lenders from whom we have
borrowed. From time to time, we have large position concentrations in
securities of a single issuer or issuers engaged in a specific industry. In
the past, we experienced large position concentrations with the securities
of a number of issuers engaged in business and services related to the
Internet. This concentration resulted in higher trading losses than would
have occurred if our positions and activities were less concentrated.
Moreover, the risks related to large position concentrations in
Internet-related securities are particularly significant due to the rapid
and extensive fluctuations in the bid and ask prices for these securities,
which are compounded by the relatively limited volume of these securities
available for trading.
The success of our market-making activities depends on:
o the price volatility of specific securities;
o our ability to attract order flow;
o the skill of our personnel;
o the availability of capital; and
o general market conditions.
To attract order flow, we must be competitive on:
o providing enhanced liquidity to our customers;
o the speed of our order execution;
o payment for order flow;
o the sophistication of our trading technology; and
o the quality of our customer service.
In our role as a market maker, we attempt to derive a profit from the
difference between the prices at which we buy and sell securities. However,
competitive forces often require us to:
o match the quotes other market makers display; and
o hold varying amounts of securities in inventory.
By having to maintain inventory positions, we are subjected to a high
degree of risk. We cannot assure you that we will be able to manage our
inventory risk successfully or that we will not experience significant
losses, either of which could materially adversely affect our business,
financial condition and operating results.
WE DEPEND ON OUR ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL.
Our future success depends on the continued service of key employees,
such as Kenneth D. Pasternak, our president and chief executive officer. We
have entered into an employment agreement with Mr. Pasternak.
We also maintain a "key person" life insurance policy on Mr.
Pasternak. Competition for key personnel and other highly qualified
management, sales, trading, compliance and technical personnel is intense.
We cannot assure you that we will be able to retain our key personnel. We
cannot assure you that we will be able to attract, assimilate or retain
other highly qualified personnel in the future. The loss of the services of
any of our key personnel or the inability to identify, hire, train and
retain other qualified personnel in the future could have a material
adverse effect on our business, financial condition and operating results.
From time to time, other companies in the securities industry have
experienced losses of sales and trading professionals. The level of
competition to attract these professionals is intense. We cannot assure you
that we ourselves will not lose professionals due to increased competition
or other factors in the future. The loss of a sales and trading
professional, particularly a senior professional with broad industry
expertise, could have a material adverse effect on our business, financial
condition and operating results.
OUR REVENUES MAY BE IMPACTED BY DIMINISHED MARKET ACTIVITY DUE TO
ADVERSE ECONOMIC, POLITICAL AND MARKET CONDITIONS.
The securities business generally is, by its nature, volatile. It is
directly affected by numerous national and international factors that are
beyond our control, including:
o economic, political and market conditions;
o the availability of short-term and long-term funding and
capital;
o the level and volatility of interest rates;
o legislative and regulatory changes; and
o currency values and inflation.
Any one or more of these factors may contribute to reduced levels of
activity in the securities markets generally, which could result in lower
revenues from our market-making activities. Any reduction in revenues or
any loss resulting from these factors could have a material adverse effect
on our business, financial condition and operating results.
OUR REVENUES MAY DECREASE DUE TO DECLINES IN MARKET VOLUME, PRICES OR
LIQUIDITY.
Our revenues may decrease due to a decline in market volume, prices
or liquidity. Declines in the volume of securities transactions and in
market liquidity generally result in lower revenues from market-making
activities. Lower price levels of securities also may result in reduced
trading activity and reduce our revenues from market-making transactions.
Lower price levels also can result in losses from declines in the market
value of securities held in inventory. Sudden sharp declines in market
values of securities can result in:
o illiquid markets;
o declines in the market values of securities held in inventory;
o the failure of buyers and sellers of securities to fulfill
their settlement obligations; and
o increases in claims and litigation.
Any decline in market volume, price or liquidity or any other of
these factors could have a material adverse effect on our business,
financial condition and operating results.
WE DEPEND SIGNIFICANTLY ON A FEW CUSTOMERS.
Historically, a few customers have accounted for a significant
portion of our market-making activities. We expect a significant portion of
the future demand for our market-making services to remain concentrated
within a limited number of customers. For the year ended December 31, 1999,
our three largest customers accounted for, 12%, 11% and 10%, respectively,
of our equity trading order flow as measured in share volume. None of these
customers are obligated contractually to use our market-making services.
Accordingly, these customers may direct their trading activities to other
market makers at any time. We cannot assure you that we will be able to
retain these or other major customers or they will maintain or increase
their demand for our market-making activities. The loss of, or a
significant reduction of demand for our services from, any of these
customers could have a material adverse effect on our business, financial
condition and operating results.
THIRD PARTIES MAY INFRINGE ON OUR INTELLECTUAL PROPERTY RIGHTS AND
LICENSES TO ESSENTIAL INTELLECTUAL PROPERTY MAY NOT BE RENEWED.
We rely primarily on copyright, trade secret and trademark laws to
protect our proprietary technology. Notwithstanding the precautions we have
taken to protect our intellectual property rights, it is possible that
third parties may copy or otherwise obtain and use our proprietary
technology without authorization. It is also possible that third parties
may independently develop technologies similar to ours. It may be difficult
for us to monitor unauthorized use of our proprietary technology and
intellectual property rights. We cannot assure you that the steps we have
taken will prevent misappropriation of our technology or intellectual
property rights.
We are heavily dependent on two order entry and execution software
systems. One is known as the "Brass System," which we license from Sungard
Trading Systems (Automated Securities Clearance, LTD D/B/A) and the other
is known as the "Appletree System," which we license from TCAM Systems.
Although we have rights to modify the licensed software, Automated
Securities Clearance and TCAM Systems own all modifications and
enhancements to the licensed software. In addition, Automated Securities
Clearance and TCAM Systems can use the modifications and enhancements to
the licensed software without our consent. This may have an adverse effect
on our competitive position. We rely on Automated Securities Clearance to
monitor the daily operation of the Brass System to detect problems with the
Brass System's operation. We rely on both licensors to support and maintain
the Brass and Appletree Systems. The licenses are terminable if we breach
our obligations under the license agreements. So are the licensors' daily
operation and support obligations. Our failure to maintain these
relationships could have a material adverse effect on our business,
financial condition and operating results.
We also license other software from third parties. These licenses are
integral to our business. If any of these relationships were terminated or
if any of these third parties were to cease doing business, we would be
forced to spend significant time to replace the licensed software. However,
we cannot assure you that we would be able to replace these licenses. This
could have a material adverse effect on our business, financial condition
and operating results. In addition, litigation may be necessary in the
future to:
o enforce our intellectual property rights;
o protect our trade secrets;
o determine the validity and scope of the proprietary rights of
others; or
o defend against claims of infringement or invalidity.
Litigation, whether successful or unsuccessful, could result in
substantial costs and diversions of resources. This could have a material
adverse effect on our business, financial condition and operating results.
We may in the future receive notices of claims of infringement of other
parties' proprietary rights. We cannot assure you that claims for
infringement or invalidity will not be asserted or prosecuted against us.
These claims, with or without merit, could be time consuming to defend,
result in costly litigation, divert management's attention and resources or
require us to enter into royalty or licensing agreements. We cannot assure
you that these will be available on reasonable terms, if at all. The
assertion or prosecution of these claims, whether successful or
unsuccessful, could have a material adverse effect on our business,
financial condition and operating results.
OUR FUTURE SUCCESS WILL DEPEND ON OUR RESPONSE TO THE DEMAND FOR NEW
SERVICES, PRODUCTS AND TECHNOLOGIES.
The demand for market-making services, particularly services that
rely on electronic communications gateways, is characterized by:
o rapid technological change;
o changing customer demands;
o the need to enhance existing or introduce new services and
products; and
o evolving industry standards.
New services, products and technologies may render our existing
services, products and technologies less competitive. Our future success
will depend on our ability to respond to the demand for new services,
products and technologies on a timely and cost-effective basis. We cannot
assure you that we will be successful in developing, introducing or
marketing new services, products and technologies. Our business, financial
condition and operating results may be materially adversely affected if we
fail to:
o respond adequately to technological advancements;
o respond to customer requirements; or
o develop and introduce new services, products and technologies.
WE ARE SUBJECT TO INTENSE COMPETITION.
We derive substantially all of our revenues from market-making
activities. The market for these services, particularly market-making
services through electronic communications gateways, is rapidly evolving
and intensely competitive. We expect competition to continue and intensify
in the future. Knight Securities competes primarily with wholesale,
national, and regional broker-dealers, as well as electronic
communications networks, commonly referred to as ECNs. ECNs are third party
trading systems which are typically operated as broker. Knight Capital
Markets competes with the NYSE, the AMEX, regional exchanges, Nasdaq
InterMarket competitors and ECNs. Knight Financial Products competes with
numerous small to mid-size options market-making firms on the exchange
floors, as well as with independent traders. Leading financial institutions
have also entered the equity options market-making business recently,
including by acquiring existing options market-makers. We compete primarily
on the basis of execution standards, relationships with our customers and
technology.
A number of our competitors have significantly greater financial,
technical, marketing and other resources than we have. Some of them may:
o offer a wider range of services and products than we offer;
o have greater name recognition; and
o have more extensive customer bases.
These competitors may be able to respond more quickly to new or
evolving opportunities and customer requirements. They may also be able to
undertake more extensive promotional activities and offer more attractive
terms to customers. Recent advancements in computing and communications
technology are substantially changing the means by which market-making
services are delivered, including more direct access on-line to a wide
variety of services and information. This has created demand for more
sophisticated levels of customer service. Providing these services may
entail considerable cost without an offsetting increase in revenues. In
addition, current and potential competitors have established or may
establish cooperative relationships or may consolidate to enhance their
services and products. New competitors or alliances among competitors may
emerge and they may acquire significant market share.
More recently, ECNs have emerged as an alternative forum to which
broker-dealers and institutional investors can direct their limit orders.
This allows them to avoid facilitating their trades through market makers.
As a result, we may experience a reduction in our flow of limit orders. We
cannot assure you that ECNs will not continue to capture a greater amount
of limit order flow. A substantial reduction in our limit order flow could
have a material adverse effect on our business, financial condition and
operating results.
We cannot assure you that we will be able to compete effectively with
current or future competitors or that the competitive pressures we face
will not have a material adverse effect on our business, financial
condition and operating results.
DERIVATIVES TRANSACTIONS INVOLVE GREATER RISK THAN OTHER SECURITIES
TRANSACTIONS AND WE MAY EXPERIENCE LOSSES AS A RESULT OF THOSE RISKS.
Derivatives transactions involve greater risks than transactions in
the underlying securities. Since our acquisition of Knight Financial
Products, a portion of our activity is in derivatives. Transactions in
option or futures contracts may result in losses which are not offset by
increases in the value of the underlying portfolio of securities or by
declines in the cost of the underlying securities to be acquired. A
principal risk in derivatives transactions is the rapid fluctuation in
market prices of derivatives contracts. In addition, because of the low
initial margin deposits required to establish a derivatives position,
derivatives transactions often involve substantial leverage. As a result, a
relatively small movement in the price of the contract may result in
substantial losses.
The holder of an option or futures contract can terminate that
contract prior to its exercise or expiration only by entering into a
closing transaction. This requires a secondary market for the contract on
the exchange on which the contract was purchased. There may not be a liquid
secondary market for an option or futures contract we hold when we wish to
close out our position. If there is not a liquid secondary market for an
option or futures contract we hold, we may not be able to close out our
position and may have to purchase or sell the underlying security, make or
receive a cash settlement or meet ongoing margin requirements.
WE ARE SUBJECT TO RISKS RELATING TO LITIGATION AND POTENTIAL
SECURITIES LAWS LIABILITY.
Many aspects of our business involve substantial risks of liability.
A market maker is exposed to substantial liability under federal and state
securities laws, other federal and state laws and court decisions, as well
as rules and regulations promulgated by the SEC and the NASD. We are also
subject to the risk of litigation and claims that may be without merit. As
we intend to defend actively any such litigation, significant legal
expenses could be incurred. An adverse resolution of any future lawsuits or
claims against us could have a material adverse effect on our business,
financial condition and operating results.
WE DEPEND SIGNIFICANTLY ON OUR COMPUTER AND COMMUNICATIONS SYSTEMS.
Our market-making activities depend on the integrity and performance
of the computer and communications systems supporting them. Extraordinary
trading volumes or other events could cause our computer systems to operate
at an unacceptably low speed or even fail. Any significant degradation or
failure of our computer systems or any other systems in the trading process
could cause customers to suffer delays in trading. These delays could cause
substantial losses for customers and could subject us to claims from
customers for losses. We cannot assure you that our network protections
will work. Our systems may also fail as a result of:
o a tornado;
o fire or other natural disasters;
o power or telecommunications failure;
o act of God; or
o war.
Any computer or communications system failure or decrease in computer
systems performance that causes interruptions in our operations could have
a material adverse effect on our business, financial condition and
operating results.
CERTAIN PROVISIONS OF DELAWARE LAW AND OUR CHARTER MAY MAKE A
TAKEOVER OF OUR COMPANY DIFFICULT.
We are organized under the laws of the State of Delaware. Certain
provisions of Delaware law may have the effect of delaying or preventing a
change in our control. In addition, certain provisions of our certificate
of incorporation may have anti-takeover effects and may delay, defer or
prevent a takeover attempt that a stockholder might consider in its best
interest. Our certificate of incorporation authorizes the board to
determine the terms of our unissued series of preferred stock and to fix
the number of shares of any series of preferred stock without any vote or
action by our stockholders. As a result, the board can authorize and issue
shares of preferred stock with voting or conversion rights that could
adversely affect the voting or other rights of holders of our common stock.
In addition, the issuance of preferred stock may have the effect of
delaying or preventing a change of control, because the rights given to the
holders of a series of preferred stock may prohibit a merger,
reorganization, sale, liquidation or other extraordinary corporate
transaction.
WE CANNOT PREDICT OUR FUTURE CAPITAL NEEDS OR OUR ABILITY TO SECURE
ADDITIONAL FINANCING.
Our business depends on the availability of adequate funding and
regulatory capital under applicable regulatory requirements. Historically,
we have satisfied these needs from internally generated funds and from our
initial public offering. We currently anticipate that our available cash
resources will be sufficient to meet our presently anticipated working
capital and capital expenditure requirements for at least the next 12
months. We may need to raise additional funds to:
o increase capital available for inventory positions;
o support more rapid expansion;
o develop new or enhanced services and products;
o respond to competitive pressures;
o acquire complementary businesses, products or technologies; or
o respond to unanticipated requirements.
We cannot assure you that additional financing will be available when
needed on terms favorable to us.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements based on our
current expectations, assumptions, estimates and projections about our
company and our industry. These forward-looking statements involve risks
and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various
factors described in this section and elsewhere in this prospectus. We
undertake no obligation to update publicly any forward-looking statements
for any reason, even if new information becomes available or other events
occur in the future.
USE OF PROCEEDS
All of the shares of our common stock are being sold by the selling
stockholders. We will not receive any proceeds from the sale of the shares
of our common stock.
SELLING STOCKHOLDERS
All of the shares being offered hereby are being offered for the
account of the selling stockholders. The selling stockholders consist of
the five former members of Arbitrade Holdings LLC (currently, Knight
Financial Products LLC), which we acquired pursuant to the Agreement and
Plan of Merger between the parties dated November 17, 1999. The selling
stockholders may sell the shares being offered hereby at any time or from
time to time, in such amounts as the selling stockholders, in their
discretion, determine.
The following table sets forth certain information, as provided by
the selling stockholders, with respect to the shares owned by each of the
selling stockholders and the number of shares which may be offered for sale
pursuant to this prospectus by each of the selling stockholders. This
information was accurate as of the date such information was provided to
us. The amount set forth may have increased or decreased since the date
such information was provided.
The shares may be offered from time to time by each of the selling
stockholders named below. However, the selling stockholders are under no
obligation to sell all or any portion of the shares, nor are any of the
selling stockholders obligated to sell any shares immediately under this
prospectus.
Since the selling stockholders may sell all or part of their
respective shares and such offerings are not being underwritten on a firm
commitment basis, no estimate can be given as to the number of shares or
percent of ownership that will be held by any selling stockholder upon
termination of any offering made hereby.
<TABLE>
<CAPTION>
Name of Selling Shares Beneficially Owned Before An Offer Number of
Stockholder ----------------------------------------- Shares Being
---------------------- Registered Hereby
Percent of Total -----------------
Outstanding Shares
Number of Shares as of July 17, 2000
---------------- -------------------
<S> <C> <C> <C>
Deephaven Inc. (1) 3,519,652 2.88% 948,652
Gildor Trading Inc.(2) 2,783,825 2.28% 662,500
Peter Hajas (3) 2,783,825 2.28% 662,500
Merrill Ferguson 131,313 * 113,174
Mark Lyons 131,313 * 113,174
</TABLE>
* Less than 1%.
(1) In addition, Mr. Irvin Kessler, the sole stockholder of Deephaven
Inc., is the beneficial owner of an aggregate of 1,155,073 additional
shares of Class A Common Stock. As a result, Mr. Kessler is the
beneficial owner of a total of 4,674,725 shares of Class A Common
Stock, representing 3.82% of the total outstanding shares of Class A
Common Stock as of July 17, 2000. Mr. Kessler is Chief Executive
Officer of Deephaven Capital Management LLC, an indirect wholly owned
subsidiary of Knight Trading Group.
(2) Mr. Gildor, the sole stockholder of Gildor Trading Inc., is Chief
Executive Officer of Laboratory for Computerized Trading LLC, an
indirect wholly owned subsidiary of Knight Trading Group.
(3) Mr. Hajas is Chief Executive Officer of Knight Financial Products LLC
and a director of Knight Trading Group.
PLAN OF DISTRIBUTION
We are registering all of the shares being registered pursuant to the
registration statement of which this prospectus forms a part on behalf of
certain selling stockholders. All of the shares originally were issued by
us in connection with our acquisition of Arbitrade Holdings. We will
receive no proceeds from this offering. The selling stockholders named in
the table above or pledgees, donees, transferees or other
successors-in-interest selling shares received from a named selling
stockholder as a gift, partnership distribution or other non-sale related
transfer after the date of this prospectus (collectively, the selling
stockholders) may sell the shares from time to time. The selling
stockholders will act independently of us in making decisions with respect
to the timing, manner and size of each sale. The sales may be made on one
or more exchanges or in the over-the-counter market or otherwise, at
prices and at terms then prevailing or at prices related to the then
current market price, or in negotiated transactions. The selling
stockholders may effect these transactions by selling the shares to or
through broker-dealers. The shares may be sold by one or more of, or a
combination of, the following:
o a block trade in which the broker-dealer so engaged will
attempt to sell the shares as agent but may position and resell
a portion of the block as principal to facilitate the
transaction;
o purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus;
o an exchange distribution in accordance with the rules of such
exchange;
o ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and
o in privately negotiated transactions;
To the extent required, this prospectus may be amended or
supplemented from time to time to describe a specific plan of distribution.
In effecting sales, broker-dealers engaged by the selling stockholders may
arrange for other broker-dealers to participate in the resales.
The selling stockholders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise.
In such transactions, broker-dealers may engage in short sales of the
shares in the course of hedging the positions they assume with selling
stockholders. The selling stockholders also may sell shares short and
redeliver the shares to close out such short positions. The selling
stockholders may enter into options or other transactions with
broker-dealers which require the delivery to the broker-dealer of the
shares. The broker-dealer may then resell or otherwise transfer those
shares pursuant to this prospectus. The selling stockholders also may loan
or pledge the shares to a broker-dealer. The broker-dealer may sell the
shares so loaned, or upon a default the broker-dealer may sell the pledged
shares pursuant to this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling stockholders.
Broker-dealers or agents may also receive compensation from the purchasers
of the shares for whom they act as agents or to whom they sell as
principles, or both. Compensation as to a particular broker-dealer might be
in excess of customary commissions and will be in amounts to be negotiated
in connection with the sale. Broker-dealers or agents and any other
participating broker-dealers or the selling stockholders may be deemed to
be 'underwriters' within the meaning of Section 2(11) of the Securities Act
in connection with the sales of the shares. Accordingly, any such
commission, discount or concession received by them and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
discounts or commissions under the Securities Act. Because selling
stockholders may be deemed to be 'underwriters' within the meaning of
Section 2(11) of the Securities Act, the selling stockholders will be
subject to the prospectus delivery requirements of the Securities Act. In
addition, any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 promulgated under the Securities Act may be sold under
Rule 144 rather than pursuant to this prospectus. The selling stockholders
have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers
regarding the sale of their securities. There is no underwriter or
coordinating broker acting in connection with the proposed sale of shares
by selling stockholders.
The shares will be sold only through registered or licensed brokers
or dealers if required under applicable state securities laws. In addition,
in certain states the shares may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption
from the registration or qualification requirement is available and is
complied with.
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the shares may not simultaneously
engage in market-making activities with respect to our common stock for a
period of two business days prior to the commencement of such distribution.
In addition, each selling stockholder will be subject to applicable
provisions of the Exchange Act and the associated rules and regulations
under the Exchange Act, including Regulation M, which provisions may limit
the timing of purchases and sales of shares of our common stock by the
selling stockholders. We will make copies of this prospectus available to
the selling stockholders and have informed them of the need for delivery of
copies of this prospectus to purchasers at or prior to the time of any sale
of the shares.
We will file a supplement to this prospectus, if required, pursuant
to Rule 424(b) under the Securities Act upon being notified by a selling
stockholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares through a block trade, special
offering, exchange distribution or secondary distribution or a purchase by
a broker or dealer. That supplement will disclose:
o the name of each such selling stockholder and of the
participating broker-dealer(s);
o the number of shares involved;
o the price at which such shares were sold;
o the commissions paid or discounts or concessions allowed to
such broker-dealer(s), where applicable;
o that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in
this prospectus; and
o other facts material to the transaction.
We will bear all costs, expenses and fees in connection with the
registration of the shares. The selling stockholders will bear all
commissions and discounts, if any, attributable to the sales of the shares.
The selling stockholders may agree to indemnify certain persons, including
broker-dealers and agents, against certain liabilities in connection with
the offering of the shares, including liabilities arising under the
Securities Act.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange Act,
and, consequently, are required to file periodic reports and other
information with the SEC. Such information can be inspected without charge
at the public reference facilities of the SEC at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the SEC located at Suite 1400, Northwest, Atrium Center, 500
West Madison Street, Chicago, Illinois 60661 and Seven World Trade Center,
13th Floor, New York, New York 10048. Copies of such material may also be
obtained at prescribed rates from the Public Reference Section of the SEC,
450 Fifth Street, N.W., Washington, D.C. 20549. The SEC also maintains a
web site (http://www.sec.gov) that contains all information we file
electronically with the SEC.
INCORPORATION BY REFERENCE
This prospectus is part of a registration statement we filed with the
SEC. The SEC permits us to incorporate by reference: the information that
we file with them, which means that we can disclose important information
to you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus, and information that
we file with the SEC after the date of this prospectus will automatically
update and supersede this information. We incorporate by reference the
documents listed below filed by us with the SEC. We also incorporate by
reference any future filings made with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended, after the
date of this prospectus until the termination of this offering.
o Our Annual Report on Form 10-K for the fiscal year ended December 31,
1999.
o Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2000.
o Our Current Report on Form 8-K, dated January 6, 2000 and filed with
the SEC on January 12, 2000, and our Current Report on Form 8-K,
dated July 19, 2000 and filed with the SEC on July 20, 2000.
o The description of our common stock which is contained in Amendment
No. 2 to our Registration Statement on Form S-1 (333-71559) filed
under the Securities Act on February 22, 1999, including any
amendment or reports filed for the purpose of updating such
description.
If you request a copy of any or all of the documents incorporated by
reference, we will send to you the copies requested at no charge. However,
we will not send exhibits to such documents unless such exhibits are
specifically incorporated by reference in such documents. You should direct
requests for such copies to: Secretary, Knight Trading Group, Inc., Newport
Tower, 29th Floor, 525 Washington Boulevard, Jersey City, New Jersey 07310.
LEGAL MATTERS
The validity of the securities offered under this registration
statement will be passed upon for us by our Senior Vice President and
General Counsel, Michael T. Dorsey, Esq.
EXPERTS
The financial statements incorporated in this prospectus by reference
to the Annual Report on Form 10-K for the year ended December 31, 1999 have
been audited by PricewaterhouseCoopers LLP, independent accountants. These
financial statements have been so incorporated in reliance on the report of
such independent accountants given on the authority of such firm as experts
in auditing and accounting.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to the registrant of the offering are estimated to be as
follows:
Securities and Exchange Commission Registration Fee....... $22,357.50
Legal fees and expenses................................... $35,000.00
Miscellaneous............................................. $5,642.50
TOTAL................................................... $63,000.00
The registrant has agreed to pay all of the expenses incident to the
registration of the shares. The Company has not agreed to pay out of pocket
expenses and legal fees, if any, incurred by the selling stockholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
We, a Delaware corporation, are empowered by Section 145 of the
Delaware General Corporation Law (the DGCL), subject to the procedures and
limitations stated therein, to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding by reason of the fact that such person is or was
our director, officer, employee or agent, or is or was serving at the
request of us as a director, officer, employee or agent of another
corporation or other enterprise, against reasonable expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually
incurred by him in connection with such action, suit or proceeding, if such
director, officer, employee or agent acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of us
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. We are required by Section 145
to indemnify any person against reasonable expenses (including attorneys'
fees) actually incurred by him in connection with an action, suit or
proceeding in which he is a party because he is or was a director, officer,
employee or agent of us or is or was serving at the request of us as a
director, officer, employee or agent of another corporation or other
enterprise, if he has been successful, on the merits or otherwise, in the
defense of the action, suit or proceeding. Section 145 also allows a
corporation to purchase and maintain insurance on behalf of any such person
against any liability asserted against him in any such capacity, or arising
out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under the provisions of
Section 145. In addition, Section 145 provides that indemnification
pursuant to its provisions is not exclusive of other rights of
indemnification to which a person may be entitled under any bylaw,
agreement, vote of shareholders or disinterested directors, or otherwise.
Article 7 of our Certificate of Incorporation (the Charter) provides
that we shall indemnify and hold harmless any person who was, is or is
threatened to be made a party to a proceeding by reason of the fact that he
or she (i) is or was our director or officer (ii) while our director or
officer, is or was serving at our request as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise, to the
fullest extent permitted under the DGCL. The right to indemnification under
Article 7 of the Charter is a contract right which includes, with respect
to directors and officers, the right to be paid by us the expenses incurred
in defending any such proceeding in advance of its disposition.
ITEM 16. EXHIBITS
EXHIBIT NUMBER DESCRIPTION
4 Specimen Common Stock certificate.
5 Opinion of Michael T. Dorsey, Senior Vice President and
General Counsel of the Registrant.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Michael T. Dorsey, Senior Vice President and
General Counsel of the Registrant (contained in
Exhibit 5 hereto).
24 Powers of Attorney (included in signature page).
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a) (3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the 'Calculation of Registration Fee' table in
the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
provided, however, that paragraphs (a) (1) (i) and (a) (1) (ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or 15
(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the registrant pursuant to the provisions described in Item 15
above, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act of 1933, as amended, and
is, therefore, unenforceable. If a claim for indemnification against such
liabilities (other than payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(5) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(6) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(7) For purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13 (a) or Section 15 (d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15 (d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Jersey City, State of New Jersey,
on this 19th day of July, 2000.
Knight Trading Group, Inc.
By /s/ Kenneth D. Pasternak
--------------------------------
Name: Kenneth D. Pasternak
Title: Director, President and
Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kenneth D. Pasternak and Walter F.
Raquet, or either of them, his true and lawful attorney-in-fact and agent,
with full power of substitution, for him and in his name, place and stead,
in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and to file the
same with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities with Knight Trading Group, Inc. and on the date indicated.
Name Title Date
---- ----- ----
/s/ Kenneth D. Pasternak Director, President and July 19, 2000
-------------------------- Chief Executive Officer
Kenneth D. Pasternak
/s/ Robert I. Turner Director, Executive Vice July 19, 2000
-------------------------- President and Chief Financial
Robert I. Turner Officer (principal financial
and accounting officer)
/s/ Walter F. Raquet Director and Executive Vice July 19, 2000
-------------------------- President
Walter F. Raquet
/s/ Robert M. Lazarowitz Director and Executive Vice July 19, 2000
-------------------------- President
Robert M. Lazarowitz
/s/ Anthony M. Sanfilippo Director and Executive Vice July 19, 2000
-------------------------- President
Anthony M. Sanfilippo
/s/ Charles V. Doherty Director July 19, 2000
--------------------------
Charles V. Doherty
/s/ Gene L. Finn Director July 19, 2000
--------------------------
Gene L. Finn
/s/ Robert Greifeld Director July 19, 2000
--------------------------
Robert Greifeld
/s/ Gary R. Griffith Director July 19, 2000
--------------------------
Gary R. Griffith
/s/ Peter S. Hajas Director July 19, 2000
--------------------------
Peter S. Hajas
/s/ John G. Hewitt Director July 19, 2000
--------------------------
John G. Hewitt
/s/ Bruce R. McMaken Director July 19, 2000
--------------------------
Bruce R. McMaken
/s/ J. Joe Ricketts Director July 19, 2000
--------------------------
J. Joe Ricketts
/s/ Rodger O. Riney Director July 19, 2000
--------------------------
Rodger O. Riney
Director July 19, 2000
--------------------------
V. Eric Roach
By: /s/ Kenneth D. Pasternak July 19, 2000
---------------------------
Kenneth D. Pasternak
As Attorney-in-Fact
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
4 Specimen Common Stock certificate.
5 Opinion of Michael T. Dorsey, Senior Vice President
and General Counsel of the Registrant.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Michael T. Dorsey, Senior Vice President
and General Counsel of the Registrant (contained in
Exhibit 5 hereto).
24 Powers of Attorney (included in signature page).
