The AG's Authority in California
California Attorney General Rob Bonta and the DFPI are positioned to lead the nation's response to PFOF abuses. California's Unfair Competition Law (Business & Professions Code §17200) provides a powerful tool to investigate and enjoin deceptive payment-for-order-flow arrangements that harm California consumers.
The Harm to California Investors
California retail investors are the most heavily affected in the nation by PFOF arrangements. Robinhood, the poster child for PFOF, has millions of California users—all routing orders to Citadel Securities. The estimated annual transfer of value from California retail investors to Citadel through spread capture runs into the hundreds of millions.
Rob Bonta has an estimated 8 million California retail investors — the largest single-state population of retail traders in the country as potential complainants. This is not an abstract regulatory question — it is a matter of whether California's chief law enforcement officer will protect the financial interests of California residents when federal regulators have failed to act.
The Griffin Political Context
California Attorney General Rob Bonta should be aware of the documented political investment Kenneth Griffin has made in California. Griffin has given at least $50 million nationally in 2022 alone, with California-proximate recipients benefiting from Griffin's national Republican investment to national Republican super PACs with California operations and select California initiatives. This political context does not determine what the AG should do — but it is relevant to understanding why federal and state regulators have been slow to act, and why an independent state investigation would be meaningful.
What the AG Should Investigate
- Whether PFOF arrangements between major discount brokers and Citadel Securities violate California consumer protection law by creating undisclosed conflicts of interest
- Whether California broker-dealers are meeting best execution obligations under state securities law
- Whether Citadel Securities' disclosures to California retail investors adequately describe the PFOF relationship
- Whether a multistate investigation coordinated through NASAA would be appropriate
Contact Rob Bonta
California residents can contact the Attorney General's office at https://oag.ca.gov to request investigation of PFOF-related broker-dealer practices affecting California investors.