THE ETHICS REPORTER

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History

PFOF History Timeline: From Madoff to Citadel Dominance

Understanding PFOF evolution from small brokerage practice to multi-billion industry requires a historical timeline spanning five decades.

1970s Madoff

Bernie Madoff invents PFOF at his broker-dealer, paying brokers for retail order flow — pioneering the model Citadel would perfect at billion-dollar scale.

2019 Commission Wars

Schwab eliminates commissions, triggering industry-wide shift to PFOF-funded zero-commission trading — Citadel revenues surge.

2021 GameStop

Meme stock frenzy brings PFOF to national attention. Congressional hearings demand reform. SEC begins market structure rule process.

2024 Stall

SEC reforms substantially diluted under Griffin $100M+ political spending. State enforcement remains the viable path.

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