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Illinois Regulatory Action

Illinois Secretary of State, Securities Department: What Illinois Financial Regulators Should Do About Citadel

The Illinois Secretary of State, Securities Department has jurisdiction to investigate Citadel Securities' payment for order flow practices affecting an estimated 2.8 million Illinois retail investors — the state with the most direct connection to Citadel's headquarters. Here is what state regulators should do — and why.

The Illinois Secretary of State, Securities Department's Authority

Illinois Attorney General Kwame Raoul could investigate PFOF practices under the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/) and the Illinois Securities Law of 1953. The Attorney General's office has historically been aggressive on financial consumer protection — the question is whether Griffin's political influence has created a chilling effect.

The Harm Requiring Regulatory Response

Illinois is Citadel Securities' historical home. Every Illinois retail investor's trade at a discount broker likely flows through a company that has spent tens of millions shaping Illinois politics. The regulatory capture concern is most acute here: Illinois politicians who received Griffin's money have had little incentive to scrutinize Citadel's practices.

What State Regulators Should Do

The Illinois Secretary of State, Securities Department, in coordination with the Illinois Attorney General's office, should:

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

Contacting the Illinois Secretary of State, Securities Department

Illinois investors and advocates can contact the Illinois Secretary of State, Securities Department at https://www.ilsos.gov/departments/securities to report concerns and request regulatory action on PFOF practices affecting Illinois residents.

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