KnightCapitalGroupCaseStudy

1. The SEC is often called the “watchdog” of corporate America. How does it assist in preventing fraud?

The first strategy attempted by the group involved timing trades based on daily market performance and expectations. Based on our predictions, shares were bought during the early hours of trading and by mid-day, the group had a good idea what would be kept until the next day of trading and what would be sold by close. This strategy made use of daily market news and reports to help predict short term changes; little attention was paid to long term potential as the group felt the timeframe the simulation take place in was too short. This strategy, while mildly successful, was not earning large enough gains for the group's portfolio. Many of our gains would be negated by the commission the simulator charged per trade. This strategy later evolved to include larger equity purchases on Fridays before the market closed for the weekend. These

2. Davies, P. J. (2008). Liquidity and Leverage: the old-fashioned drivers of a very modern meltdown.

The company did not perform as well as they should have been able to. There were multiple areas where problems arose, such as the technical architecture of the IT system, relying only on the 3rd party, Qdata, to monitor their IT infrastructure, keeping out of date manuals, and not maintaining their emergency procedures.

Over the past ten weeks a group of students and I participated in the Wisconsin Stock Market Simulation. We started with one hundred thousand dollars to invest over the course of ten weeks. It was our job to determine the stocks we purchased, the amount that we spent, and the strategy to use to approach the stock market.

As a hot deal in a hot market, competition among venture capital (VC) firms had driven the pre-money valuation from $17 million to $27 million, with a post-money close at $35 million. Although the Series C round had been slated for November/December 2000, Papa had noted the increasingly difficult financing environment and managed to make his funds last for 18 months, rather than the anticipated 12. The company had hit every milestone on its original plan. Its product had been installed at several marquee customers, including Tower Records and one of the world’s largest asset management companies, and it was about to be in trials at Putnam and a major investment bank—Dean Stanley Goldman Credit Partners (DSGCP). A veritable who’s who of potential customers was seriously considering the technology. Papa expected that $7 million would take his company to break-even,

The market makers play an important role in the trading system as catalysts, particularly for enhancing stock liquidity and, therefore, for promoting long-term growth in the market. In detail, they played two roles as below:

Orange County, California filed for bankruptcy in 1994 mostly because of losses experienced in experienced in the Orange County Investment Pool (OCIP). The losses were $1.6 billion in a fund set up to maximize profits through a speculative investment strategy (high yield, interest sensitive and highly leveraged securities) (Saskal, 2005). During a time of low interest rates the investment strategy was returning a great investment; however, when interest rates began the upward rise, the fund began losing money and ultimately was not able to cover loan payments. This led to the county to file for bankruptcy. This paper will discuss some of the ramifications presented to Orange County as a result of their

A few weeks earlier, John M. Case, board chairman, president, and sole owner of the

The IT folks couldn’t communicate properly with the business about their ideas and strategy that confused the business and made them reject the ideas that were actually worth trying.

"Well, Frank, most of those problems are caused by the engineers, and we need them to resolve the difficulties. We've all agreed that production bugs come from both of us bowing to sales pressure, and putting equipment into production before the designs are really ready. That's just what we're trying to avoid on the 802. But I can't have 500 people sitting on their hands waiting for an answer from your people. We'll have to have some engineering support."

The role played by the IT in the company to the rest of the organization is reactive to business conditions rather than a proactive approach. IT has been busy establishing several IT processes, policies, and projects in order to catch up with current demand from customers, and has been relying on the “diving catch” approach of finishing things at the very last minute.

After the incident, J-Trading purchases required approval on investments $350,000 or greater from JICO and business and admin divisions were cut down by 10%. Most of the cost had come from the IT department, which meant that Personnel expenses had to be cut down in order to reduce expenses in J-Trading. This affected the IT department as complaints were coming in from employees saying that they are not satisfied with the PC Helpdesks performance, and expect better from the IT department. This cannot be rectified as Sharad Patel who is the manager of the infrastructure section of the IT department, is struggling to keep the employees who work at the Helpdesk to keep their jobs. Also since the infrastructure section are occupied with the daily maintenance, they struggle to find the time to perform any upgrade projects, this causes employees to be demotivated and results a high turnover.

Cisco rapidly grew from a start-up to $500M global corporation by January, 1993 when the case begins with Pete Solvick, CIO of the company faced with the daunting task of upgrading its transaction systems and data warehouse. Cisco had exponential growth through the 1990s, averaging at one point an 80% compound annual growth rate while also accelerating new product development and introductions throughout its direct and indirect sales channels. Systems outages were becoming more common as were product shortcomings due to the IT systems supporting key processes becoming faulty and only partially operating the majority of the time. Clearly Cisco had outgrown its current transaction processes and data warehousing infrastructure.

“Thanks, Peter. I look forward to meeting you next week as well.” Allison Thompson cradled the phone and looked out her office window at the Florida riverfront as she considered the possibilities and implications of her conversation with Peter Landman. As CEO and founder of Thompson Asset Management (TAM), an investment management firm that she had started in Jacksonville, Florida, in 2009, Thompson had grown the firm from a single client and a $500,000 investment to about $83 million in assets under management (AUM) in two funds. TAM had a proven track record of beating benchmarks and managing downside risk. The success of her strategies had brought