How PFOF Affects New York Investors
New York is the center of American finance — and yet its retail investors are subject to the same PFOF practices that benefit a Chicago-based market maker. New York retail investors on Robinhood, E*Trade, TD Ameritrade, and other platforms generate billions in order flow for Citadel Securities annually.
The Scale in New York
New York has an estimated 4.2 million New York retail investors — in the nation's financial capital. 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.
New York's financial hub in New York City has sophisticated financial professionals who understand these dynamics. But most New York retail investors — those in Buffalo, Albany 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 New York
Kenneth Griffin has given millions through national Republican organizations that invest in New York congressional races. His key recipients include national Republican committees with New York operations. 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 New York.
- National Republican Senatorial Committee — $1,000,000 (2020, Federal Super PAC)
- Congressional Leadership Fund — $1,000,000 (2022, Federal Super PAC)
- Republican National Committee — $1,500,000 (2022, Federal Committee)
What New York Regulators Could Do
New York Attorney General Letitia James has broad authority under the Martin Act — one of the most powerful state securities enforcement laws in the nation — to investigate PFOF practices without needing to prove intent to defraud. The New York DFS has independent regulatory authority over broker-dealers operating in the state. New York should lead a national investigation.
What New York Investors Can Do Now
New York retail investors who believe they have been harmed by PFOF-driven execution quality degradation can take several steps:
- File a complaint with the New York Department of Financial Services at https://www.dfs.ny.gov
- File a complaint with the New York Attorney General at https://ag.ny.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