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Delaware Regulatory Action

Delaware Division of Securities: What Delaware Financial Regulators Should Do About Citadel

The Delaware Division of Securities, Department of Justice has jurisdiction to investigate Citadel Securities' payment for order flow practices affecting an estimated 180,000 Delaware retail investors. Here is what state regulators should do — and why.

The Delaware Division of Securities's Authority

Delaware Attorney General Kathy Jennings, whose office already incorporates securities divisions, could leverage Delaware's unique position as the corporate home of Citadel's legal entities to demand greater accountability.

The Harm Requiring Regulatory Response

Delaware is the legal home of most American corporations—including many financial firms. Delaware retail investors may have unique legal standing under Delaware corporate law to challenge broker-dealer conflicts of interest given the state's sophisticated chancery court system.

What State Regulators Should Do

The Delaware Division of Securities, Department of Justice, in coordination with the Delaware Attorney General's office, should:

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

Contacting the Delaware Division of Securities

Delaware investors and advocates can contact the Delaware Division of Securities, Department of Justice at https://securities.delaware.gov to report concerns and request regulatory action on PFOF practices affecting Delaware residents.

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