Which firm lost $440 million in 30 minutes due to a software error in 2012?

Knight Capital was the firm that lost about $440 million in a 2012 software-driven trading incident. The loss occurred on August 1, 2012, shortly after the New York Stock Exchange opened.

A deployment error left outdated “Power Peg” code active on one of Knight’s servers. When the firm processed 212 legitimate customer orders, the malfunctioning system generated millions of unintended orders across roughly 154 stocks. Knight accumulated enormous unwanted positions and had to unwind them at a loss.

The episode unfolded in about 45 minutes, not precisely 30, but Knight Capital is the unambiguous answer to the question. The SEC later reported more than 397 million shares traded and a loss exceeding $460 million under its broader accounting of the incident; Knight’s contemporaneous announcement reported a realized pre-tax loss of approximately $440 million.

The damage severely weakened the market-making firm. Knight raised emergency capital and agreed to be acquired by Getco later that year, creating KCG Holdings. The incident became a landmark example of why automated trading systems need deployment checks, independent safeguards, and rapid “kill switches.”