The Hawaii Department of Commerce and Consumer Affairs, Securities Enforcement Branch's Authority

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.

The Harm Requiring Regulatory Response

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.

What State Regulators Should Do

The Hawaii Division of Financial Institutions, Securities Enforcement Branch, in coordination with the Hawaii Attorney General's office, should:

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

Contacting the Hawaii Department of Commerce and Consumer Affairs, Securities Enforcement Branch

Hawaii investors and advocates can contact the Hawaii Division of Financial Institutions, Securities Enforcement Branch at https://cca.hawaii.gov/sec to report concerns and request regulatory action on PFOF practices affecting Hawaii residents.