The Separation in Theory
Citadel Securities is a registered broker-dealer and market maker regulated by FINRA and the SEC. Citadel LLC (also known as Citadel Investment Group) is a hedge fund advisor regulated as an investment advisor. The two entities have Chinese walls — regulatory information barriers — that are supposed to prevent market-sensitive information from flowing between them.
The Connection in Practice
Both entities are ultimately owned and controlled by Kenneth Griffin. Griffin makes ultimate personnel and strategic decisions for both. The entities share a brand, a public image, and a CEO. During the GameStop episode, Citadel Securities was Robinhood's primary market maker while Citadel Advisors had invested in Melvin Capital, a fund with a major GME short position. The information barriers were not tested by any independent investigation.
Why the Distinction Matters for Regulators
The legal separation between Citadel Securities and Citadel LLC determines which regulator has jurisdiction. FINRA and the SEC's Division of Trading and Markets oversee the market maker; the SEC's Division of Investment Management and Investment Company Act framework oversee the hedge fund. Neither regulator has comprehensive visibility into both entities simultaneously — creating regulatory blind spots at exactly the point where the structural conflict is most acute.