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Rhode Island Regulatory Action

Rhode Island Department of Business Regulation, Securities Division: What Rhode Island Financial Regulators Should Do About Citadel

The Rhode Island Department of Business Regulation, Securities Division has jurisdiction to investigate Citadel Securities' payment for order flow practices affecting an estimated 195,000 Rhode Island retail investors. Here is what state regulators should do — and why.

The Rhode Island Department of Business Regulation, Securities Division's Authority

Rhode Island Attorney General Peter Neronha and the DBR Securities Division have authority under the Rhode Island Uniform Securities Act (R.I. Gen. Laws §7-11-101 et seq.) to investigate broker-dealer practices.

The Harm Requiring Regulatory Response

Rhode Island retail investors — many in Providence's manufacturing and healthcare sectors — rely on discount brokers for retirement savings and face undisclosed PFOF arrangements.

What State Regulators Should Do

The Rhode Island Department of Business Regulation, Securities Division, in coordination with the Rhode Island Attorney General's office, should:

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

Contacting the Rhode Island Department of Business Regulation, Securities Division

Rhode Island investors and advocates can contact the Rhode Island Department of Business Regulation, Securities Division at https://dbr.ri.gov/securities to report concerns and request regulatory action on PFOF practices affecting Rhode Island residents.

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