Photo: CNBC screenshot
Tommy Joyce has had a really, really rough weekend.Last Wednesday, a trading glitch lost the company $440 million in half an hour and since then stockholders have been selling in droves.
To Joyce’s credit, he did what had to be done, and fast. After saving the company with a $400 million lifeline and massively diluting shares of his company — new investors now control over 70% of Knight — Joyce was just on CNBC looking exhausted but calm.
He said that clients and investors alike responded in a positive, “flattering” way. A huge number of people (CNBC suggested 90, and Joyce confirmed it was around that number) called about buying Knight — private equity investors, stressed investors, strategic investors… the list goes on.
It was a “wide spectrum of ideas,” said Joyce. We can only imagine.
Joyce also addressed a report this weekend from the Wall Street Journal that said he had called SEC chair Mary Shapiro while she was on vacation and asked if the SEC cancel a number of crucial trading mistakes. The WSJ reported that she said no. Joyce basically confirmed that telling CNBC:
“She did what she thought was right for the industry… I’m kind of biased, I wish she had made a different decision, but she did what she thought was right…” In terms of additional regulation he then added, “I would support additional rules once we have the data to craft additional rules… and we’ll have the data once our investigation is done.”
Statements like that are what have made Joyce’s behaviour during this whole ordeal impressive. He’s taking responsibility for what happened, accepting the fall-out, and he’s being transparent about it.
Bottom line: Doing what’s right for the industry was the recurring theme in Joyce’s interview. He’s proud that he got clients out of the way when the problem started and that they’ll be made whole.
He also says the company’s capital structure is probably even stronger now that they have a new infusion of cash.
“We’re very confident we made the right choice for the firm,” he said.
Now it’s up to shareholders to decide whether or not they agree.
In his interview, Joyce explained that company was under so much stress that they “didn’t have time to communicate” with shareholders. At the same time, he said “with 600 million shares sold on Friday” he’s “curious to know what our shareholder base looks like after all that.”