THE ETHICS REPORTER

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Alaska Investor Alert

Citadel Securities and Alaska Investors: What You Need to Know

Payment for order flow — the practice by which Citadel Securities pays discount brokers for exclusive access to retail order flow — affects an estimated 120,000 Alaska retail investors. Here is what Alaska residents need to know.

How PFOF Affects Alaska Investors

Alaska's isolated retail investor population—many managing permanent fund dividends and retirement accounts—depends on online brokers routed through Citadel Securities. The opacity of PFOF arrangements means Alaska investors cannot assess the true cost of their trades.

The Scale in Alaska

Alaska has an estimated 120,000 Alaska retail investors. Each of these investors who uses a PFOF-dependent discount broker — Robinhood, TD Ameritrade, E*Trade, Charles Schwab, or Webull — is routing their orders to Citadel Securities without their knowledge or consent. Citadel captures a spread on each of these trades, generating revenue that flows back to Kenneth Griffin while providing retail investors with marginally inferior execution prices compared to what competitive exchange routing would provide.

Alaska's financial hub in Anchorage has sophisticated financial professionals who understand these dynamics. But most Alaska retail investors — those in Fairbanks, Juneau and throughout the state — are unaware that their "free" trades are funded by a practice that systematically extracts value from them.

Kenneth Griffin's Political Investment in Alaska

Kenneth Griffin has given identifiable donations to national Republican entities that fund Alaska Republicans. His key recipients include the Republican Governors Association, which has funded Alaska gubernatorial candidates. This political investment creates a documented relationship between the CEO of America's dominant retail market maker and the political figures responsible for overseeing financial regulation in Alaska.

  • Republican Governors Association — $500,000 (2022, Federal Super PAC)

What Alaska Regulators Could Do

Alaska Attorney General Treg Taylor and the Alaska Division of Banking and Securities have authority to investigate broker-dealer practices affecting Alaska residents under AS 45.55. A referral to NASAA for coordinated multistate action would amplify Alaska's leverage.

What Alaska Investors Can Do Now

Alaska retail investors who believe they have been harmed by PFOF-driven execution quality degradation can take several steps:

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