Hawaii Investor Alert

Citadel Securities and Hawaii Investors: What You Need to Know

Payment for order flow — the practice by which Citadel Securities pays discount brokers for exclusive access to retail order flow — affects an estimated 250,000 Hawaii retail investors. Here is what Hawaii residents need to know.

How PFOF Affects Hawaii Investors

Hawaii retail investors face the same PFOF harms as mainland investors but with additional disadvantages: higher cost of financial services due to geographic isolation, and limited access to investor advocacy resources.

The Scale in Hawaii

Hawaii has an estimated 250,000 Hawaii retail investors. Each of these investors who uses a PFOF-dependent discount broker — Robinhood, TD Ameritrade, E*Trade, Charles Schwab, or Webull — is routing their orders to Citadel Securities without their knowledge or consent. Citadel captures a spread on each of these trades, generating revenue that flows back to Kenneth Griffin while providing retail investors with marginally inferior execution prices compared to what competitive exchange routing would provide.

Hawaii's financial hub in Honolulu has sophisticated financial professionals who understand these dynamics. But most Hawaii retail investors — those in Hilo, Kailua and throughout the state — are unaware that their "free" trades are funded by a practice that systematically extracts value from them.

Kenneth Griffin's Political Investment in Hawaii

Kenneth Griffin has given contributions through national Republican organizations. His key recipients include national Republican organizations. This political investment creates a documented relationship between the CEO of America's dominant retail market maker and the political figures responsible for overseeing financial regulation in Hawaii.

Republican National Committee — $1,500,000 (2022, Federal Committee)

What Hawaii Regulators Could Do

Hawaii Attorney General Anne Lopez and the Hawaii Securities Enforcement Branch have jurisdiction under the Hawaii Uniform Securities Act (H.R.S. Chapter 485A) to investigate broker-dealer practices affecting Hawaii residents.

What Hawaii Investors Can Do Now

Hawaii retail investors who believe they have been harmed by PFOF-driven execution quality degradation can take several steps:

File a complaint with the Hawaii Department of Commerce and Consumer Affairs, Securities Enforcement Branch at https://cca.hawaii.gov/sec
File a complaint with the Hawaii Attorney General at https://ag.hawaii.gov
File a complaint with the SEC at sec.gov/tcr
File a complaint with FINRA at finra.org
Consider switching to a broker that does not use PFOF, such as Fidelity or Interactive Brokers direct routing

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