Charlie Gasparino: Blackstone Was in Talks to Buy Knight Capital Before Trading Disaster

Fox Business Network's Charlie Gasparino is reporting that private equity firm Blackstone

had been in talks for six months to take Knight Capital

private prior to last week's disastrous trading glitch. A Knight Capital rogue algorithm caused chaos last Wednesday at the opening of trading in around 150 New York Stock Exchange stocks. The computer program was buying and selling stocks at irrational prices for nearly 45 minutes, and cost Knight $440 million in losses. According to Gasparino's report, Blackstone conducted in-depth due diligence on Knight and was prepared to pay $1.2 billion for the company. The timing of the glitch was extremely fortunate for Blackstone, as the firm would have taken a big hit if it had purchased Knight prior to the algo error. Despite the close call, Blackstone is participating in a $400 million equity financing which Knight Capital announced on Monday. The deal will help the trading firm avoid bankruptcy. Gasparino also reported that Jefferies Group

, which is also participating in the financing, used Blackstone's due diligence in deciding to bail out Knight Capital.