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Massachusetts Regulatory Action

Massachusetts Securities Division: What Massachusetts Financial Regulators Should Do About Citadel

The Massachusetts Securities Division, Office of the Secretary of the Commonwealth has jurisdiction to investigate Citadel Securities' payment for order flow practices affecting an estimated 1.5 million Massachusetts retail investors — in a state with historically aggressive securities enforcement. Here is what state regulators should do — and why.

The Massachusetts Securities Division's Authority

Massachusetts Secretary of the Commonwealth and Securities Division have already taken enforcement actions related to PFOF and best execution. Attorney General Andrea Campbell could amplify this work under the Massachusetts Consumer Protection Act (M.G.L. c. 93A). Massachusetts should lead the nation in a multistate PFOF investigation.

The Harm Requiring Regulatory Response

Massachusetts has historically been the most aggressive state securities regulator in the country. Secretary of State William Galvin has brought landmark PFOF-related enforcement actions. Massachusetts investors deserve continued robust enforcement as Citadel's practices persist.

What State Regulators Should Do

The Massachusetts Securities Division, Office of the Secretary of the Commonwealth, in coordination with the Massachusetts Attorney General's office, should:

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

Contacting the Massachusetts Securities Division

Massachusetts investors and advocates can contact the Massachusetts Securities Division, Office of the Secretary of the Commonwealth at https://www.sec.state.ma.us to report concerns and request regulatory action on PFOF practices affecting Massachusetts residents.

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