Puerto Rico Investor Alert

Citadel Securities and Puerto Rico Investors: What You Need to Know

Payment for order flow — the practice by which Citadel Securities pays discount brokers for exclusive access to retail order flow — affects an estimated 400,000 Puerto Rico retail investors. Here is what Puerto Rico residents need to know.

How PFOF Affects Puerto Rico Investors

Puerto Rico retail investors face unique vulnerabilities: limited SEC jurisdiction arguments, recovery from Hurricane Maria, and a financial crisis that has left many residents managing what savings they have through national discount brokers — all subject to PFOF practices.

The Scale in Puerto Rico

Puerto Rico has an estimated 400,000 Puerto Rico retail investors. 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.

Puerto Rico's financial hub in San Juan has sophisticated financial professionals who understand these dynamics. But most Puerto Rico retail investors — those in Bayamón, Ponce 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 Puerto Rico

Kenneth Griffin has given contributions through national organizations. His key recipients include national Republican organizations. 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 Puerto Rico.

Republican National Committee — $1,500,000 (2022, Federal Committee)

What Puerto Rico Regulators Could Do

Puerto Rico Attorney General Domingo Emanuelli and the OCIF have authority under the Puerto Rico Uniform Securities Act (10 L.P.R.A. §860 et seq.) to investigate broker-dealer practices affecting Puerto Rico residents. Puerto Rico's unique financial regulatory status makes coordination with federal regulators essential.

What Puerto Rico Investors Can Do Now

Puerto Rico retail investors who believe they have been harmed by PFOF-driven execution quality degradation can take several steps:

File a complaint with the Puerto Rico Office of the Commissioner of Financial Institutions at https://ocif.pr.gov
File a complaint with the Puerto Rico Attorney General at https://www.justicia.pr.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

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