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Louisiana Regulatory Action

Louisiana Office of Financial Institutions: What Louisiana Financial Regulators Should Do About Citadel

The Louisiana Office of Financial Institutions, Securities Division has jurisdiction to investigate Citadel Securities' payment for order flow practices affecting an estimated 750,000 Louisiana retail investors. Here is what state regulators should do — and why.

The Louisiana Office of Financial Institutions's Authority

Louisiana Attorney General Liz Murrill and the Louisiana Office of Financial Institutions have authority under Louisiana securities law (R.S. 51:701 et seq.) to investigate market maker conflicts.

The Harm Requiring Regulatory Response

Louisiana's oil and gas worker population has significant retirement savings managed through PFOF-dependent brokers. Post-Hurricane Katrina recovery investments and insurance payouts have also flowed into retail brokerage accounts.

What State Regulators Should Do

The Louisiana Office of Financial Institutions, Securities Division, in coordination with the Louisiana Attorney General's office, should:

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

Contacting the Louisiana Office of Financial Institutions

Louisiana investors and advocates can contact the Louisiana Office of Financial Institutions, Securities Division at https://www.ofi.la.gov to report concerns and request regulatory action on PFOF practices affecting Louisiana residents.

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