THE ETHICS REPORTER

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Kansas Investor Alert

Citadel Securities and Kansas 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 500,000 Kansas retail investors. Here is what Kansas residents need to know.

How PFOF Affects Kansas Investors

Kansas retail investors have limited access to financial advocacy resources and depend primarily on national discount brokers, all of which route order flow to Citadel Securities.

The Scale in Kansas

Kansas has an estimated 500,000 Kansas 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.

Kansas's financial hub in Wichita has sophisticated financial professionals who understand these dynamics. But most Kansas retail investors — those in Overland Park, Kansas City 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 Kansas

Kenneth Griffin has given contributions through national Republican organizations. His key recipients include the National Republican Senatorial Committee and related super PACs. 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 Kansas.

  • National Republican Senatorial Committee — $1,000,000 (2020, Federal Super PAC)

What Kansas Regulators Could Do

Kansas Attorney General Kris Kobach and the Kansas Securities Commissioner have jurisdiction under the Kansas Securities Act (K.S.A. 17-12a101 et seq.) to investigate market maker conflicts.

What Kansas Investors Can Do Now

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

  • File a complaint with the Kansas Securities Commissioner at https://www.ksc.ks.gov
  • File a complaint with the Kansas Attorney General at https://ag.ks.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

Related Coverage

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