“Two years ago, Kenneth Pasternak, chief executive officer of Knight Trading Group, was flying high,” writes Charles Gasparino in today’s Wall Street Journal.

“Knight, one of the nation’s largest traders of Nasdaq stocks, was raking in big profits as small investors snapped up technology shares.”

“Knight and Mr. Pasternak caught the eye of the biggest players on Wall Street as well. In late 1999, Goldman Sachs Group, the blue-chip investment bank, considered buying the firm; Mr. Pasternak in negotiations demanded a high-ranking position if the two agreed to merge, Wall Street executives say.”

“In the end, the talks faltered — and now, so has Knight. Profits have fallen sharply, along with the firm’s share price. Will Mr. Pasternak have to pay the price? According to people close to the company, some members of Knight’s board, believing he could have navigated the firm better through the market’s shoals, now say his fate could hang in the balance Tuesday during a meeting of the firm’s board at Knight’s Jersey City, N.J., headquarters.”

“One person close to the company said the board’s independent directors are likely to call for his resignation at the meeting. Others say Mr. Pasternak, 47 years old, could decide to leave on his own because he has grown tired of running the company he co-founded in 1995.”

” ‘Knight’s independent directors are caring and thoughtful, and they’ll decide what’s in the best interest of the company,’ says John Hewitt, former president of the firm’s market-making unit. Mr. Hewitt, who resigned from the company in late June but remains on the board, added: ‘I believe that determination will affect Pasternak’s role as CEO and chairman.’ “

“Mr. Pasternak, for his part, says: ‘I’ve talked to the board members and I think I know where I sit.” As for his plans, he says: “My thoughts about whether I want to stay or leave are no different than they have been for years. I don’t care to share with you what they are.’ “

“Mr. Pasternak — who owns 7.2 million Knight shares, or 5.83% of the company, according to its most recent proxy statement — adds that he is ‘not aware of any conversations with anyone on the board about them wanting me to leave the company.’ He says he has heard ‘some rumors that I was leaving, but I never heard anyone was unhappy with me.’ As for Tuesday’s events, he says: ‘I don’t want to speculate on how the board meeting is going to go.’

“A Knight spokeswoman declined to comment on Mr. Pasternak’s future. ‘It’s the company’s policy not to comment on rumors and speculation,’ she says.”