NEW YORK (Reuters) – As Knight Capital Group Inc struggles for survival after massive trading losses it said were caused by bad software, there seems to be little chance it can rely on insurance to save the day.
Knight lost as much as 80 percent of its market value on Wednesday and Thursday and said it would have to raise money after a glitch in software it installed on Tuesday triggered a cascade of mistaken trades that wiped out $440 million of its capital.
“They are going to be looking anywhere and everywhere for coverage” provisions that might offset some of their losses, said Jonathan Ziss, a partner with the law firm Goldberg Segalla in Philadelphia.
While details of Knight's coverage are unclear, its hopes for some sort of insurance recovery for its losses hinge in part on whether the buggy code was written by a Knight employee or came from a third-party vendor.
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