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Arizona Regulatory Action

Arizona Corporation Commission Securities Division: What Arizona Financial Regulators Should Do About Citadel

The Arizona Corporation Commission, Securities Division has jurisdiction to investigate Citadel Securities' payment for order flow practices affecting an estimated 1.3 million Arizona retail investors. Here is what state regulators should do — and why.

The Arizona Corporation Commission Securities Division's Authority

Arizona Attorney General Kris Mayes has shown willingness to pursue corporate accountability and could lead or join a multistate PFOF investigation. The Arizona Corporation Commission's Securities Division has independent authority to examine broker-dealer conflicts under A.R.S. §44-1961.

The Harm Requiring Regulatory Response

Arizona has a large retiree population in the Sun Belt—many of whom are active retail investors managing IRA and 401(k) assets through discount brokers. PFOF practices mean these investors subsidize Citadel Securities' profits on every trade.

What State Regulators Should Do

The Arizona Corporation Commission, Securities Division, in coordination with the Arizona Attorney General's office, should:

  • Open an investigation into whether broker-dealers serving Arizona 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 Arizona residents
  • Contact NASAA to explore multistate coordination
  • Issue investor education guidance about PFOF practices and how Arizona investors can protect themselves
  • Consider rulemaking under state securities law to require enhanced disclosure of PFOF arrangements affecting Arizona retail investors

Contacting the Arizona Corporation Commission Securities Division

Arizona investors and advocates can contact the Arizona Corporation Commission, Securities Division at https://www.azcc.gov/securities to report concerns and request regulatory action on PFOF practices affecting Arizona residents.

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