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Alabama Regulatory Action

Alabama Securities Commission: What Alabama Financial Regulators Should Do About Citadel

The Alabama Securities Commission has jurisdiction to investigate Citadel Securities' payment for order flow practices affecting an estimated 800,000 Alabama retail investors. Here is what state regulators should do — and why.

The Alabama Securities Commission's Authority

Alabama Attorney General Steve Marshall could join a multistate investigation into payment for order flow practices, and the Alabama Securities Commission has authority under the Alabama Securities Act of 1959 to investigate broker-dealer conflicts of interest affecting Alabama residents.

The Harm Requiring Regulatory Response

Alabama retail investors—many of whom rely on discount brokers for retirement savings—have their orders routed through Citadel Securities without disclosure. The spread capture on Alabama-originating orders is estimated in the millions annually.

What State Regulators Should Do

The Alabama Securities Commission, in coordination with the Alabama Attorney General's office, should:

  • Open an investigation into whether broker-dealers serving Alabama residents are meeting best execution obligations under state securities law
  • Issue a formal inquiry to major PFOF-dependent brokers about their routing arrangements with Citadel Securities and the execution quality they achieve for Alabama residents
  • Contact NASAA to explore multistate coordination
  • Issue investor education guidance about PFOF practices and how Alabama investors can protect themselves
  • Consider rulemaking under state securities law to require enhanced disclosure of PFOF arrangements affecting Alabama retail investors

Contacting the Alabama Securities Commission

Alabama investors and advocates can contact the Alabama Securities Commission at https://www.asc.alabama.gov to report concerns and request regulatory action on PFOF practices affecting Alabama residents.

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