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North Dakota Regulatory Action

North Dakota Securities Department: What North Dakota Financial Regulators Should Do About Citadel

The North Dakota Securities Department has jurisdiction to investigate Citadel Securities' payment for order flow practices affecting an estimated 130,000 North Dakota retail investors. Here is what state regulators should do — and why.

The North Dakota Securities Department's Authority

North Dakota Attorney General Drew Wrigley and the North Dakota Securities Department have authority under the North Dakota Securities Act (N.D.C.C. Ch. 10-04) to investigate broker-dealer practices.

The Harm Requiring Regulatory Response

North Dakota's oil boom has created a significant population of energy-sector workers with retirement savings — many managed through discount brokers subject to PFOF practices.

What State Regulators Should Do

The North Dakota Securities Department, in coordination with the North Dakota Attorney General's office, should:

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

Contacting the North Dakota Securities Department

North Dakota investors and advocates can contact the North Dakota Securities Department at https://www.nd.gov/securities to report concerns and request regulatory action on PFOF practices affecting North Dakota residents.

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