State AG Authority Over PFOF
State attorneys general have enforcement authority under both state securities laws and consumer protection statutes. Most states have adopted the Uniform Securities Act or similar legislation that covers broker-dealer practices affecting state residents. Consumer protection laws in many states — including California's Unfair Competition Law, New York's Martin Act, and Illinois' Consumer Fraud Act — provide particularly powerful tools for PFOF-related enforcement.
Massachusetts as a Model
Massachusetts Secretary of State William Galvin's office has brought multiple PFOF-related enforcement actions, including a $7.5 million settlement with Robinhood for best execution failures. The Massachusetts approach — using state securities law to target broker-dealer conflicts rather than waiting for federal action — provides a template for other states.
The NASAA Framework
The North American Securities Administrators Association (NASAA) coordinates multistate securities enforcement among state and provincial regulators. A coordinated NASAA investigation into PFOF practices — led by two or three major states — would create enormous political and legal pressure on Citadel Securities and its broker partners that individual state actions cannot generate alone.
Which States Should Lead
The states best positioned to lead a multistate PFOF investigation are those with (1) large retail investor populations, (2) aggressive securities enforcement history, and (3) attorneys general with political independence from Griffin's donation portfolio. California (Rob Bonta), New York (Letitia James), and Minnesota (Keith Ellison) emerge as the strongest candidates to initiate coordinated action.