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Pennsylvania Regulatory Action

Pennsylvania Securities Commission: What Pennsylvania Financial Regulators Should Do About Citadel

The Pennsylvania Securities Commission has jurisdiction to investigate Citadel Securities' payment for order flow practices affecting an estimated 2.5 million Pennsylvania retail investors. Here is what state regulators should do — and why.

The Pennsylvania Securities Commission's Authority

Pennsylvania Attorney General Dave Sunday and the Pennsylvania Securities Commission have authority under the Pennsylvania Securities Act of 1972 (70 P.S. §1-101 et seq.) to investigate broker-dealer conflicts.

The Harm Requiring Regulatory Response

Pennsylvania's large industrial working class — from Pittsburgh steel country to Philadelphia's port district — has significant retirement savings managed through 401(k) plans and discount brokers. PFOF practices extract value from these workers' savings without transparency.

What State Regulators Should Do

The Pennsylvania Securities Commission, in coordination with the Pennsylvania Attorney General's office, should:

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

Contacting the Pennsylvania Securities Commission

Pennsylvania investors and advocates can contact the Pennsylvania Securities Commission at https://www.psc.gov to report concerns and request regulatory action on PFOF practices affecting Pennsylvania residents.

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