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Knight CEO to retire
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December 18, 2001: 2:17 p.m. ET
Nasdaq stock dealer's CEO to leave Jan. 31, Hajas to serve as interim CEO.
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NEW YORK (CNN/Money) - Knight Trading Group announced Tuesday that Chairman and CEO Kenneth Pasternak will step down in January as head of the largest Nasdaq market maker.
Knight President and Chief Operating Officer Peter Hajas will replace Pasternak as interim CEO on Feb. 1. Pasternak will retire as of Jan. 31 and will serve his remaining term as a director. He will also be available as a consultant to Knight until July, the company said in a statement.
Shares of Jersey City, N.J.-based Knight Trading (NITE: down $0.44 to $11.87, Research, Estimates), the biggest firm matching buyers and sellers on the Nasdaq, dropped nearly 4 percent in afternoon trading.
Pasternak's departure from Knight had been speculated over the summer but his retirement was unexpected, said analyst Robert Napoli of ABN Amro Inc.
Pasternak, co-founder of Knight Trading and its largest shareholder, had said as recently as last week that the environment for trading has improved since the summer.
Pasternak cited the September terrorism attack as part of his decision and will leave to focus on public service. His family has a history of public service as Pasternak's father was mayor of the town where he lived.
"With Knight's key operational management in place and our strong balance sheet, the company is poised for the future," Pasternak said in a statement. "The time is right for me to step down. Now I look forward to devoting all my energy to public service."
Pasternak is expected to run for a seat in the House of Representatives or the Senate in the current election cycle.
Knight Trading, which posted a 94 percent drop in second-quarter profits last July and then a third-quarter loss in October, is now facing challenges, said analyst Rich Repetto of Putnam Lovell Securities Inc.
Knight traditionally buys and sells shares for investors and pockets the difference between the ask and bid prices. But now the market maker is refocusing and looking more to making profits off of commissions, Repetto said.
"They used to make money purely on the spread, but now they are trying to get customers to pay on an agency basis," he said. "They've converted a lot of smaller customers."
Knight Trading has hired executive search firm Heidrick & Struggles to conduct a CEO search.
Knight Trading could not be reached for comment. 
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