The South Carolina Secretary of State, Securities Division's Authority
South Carolina Attorney General Alan Wilson and the SC Securities Division have authority under the South Carolina Uniform Securities Act (S.C. Code Ann. §35-1-101 et seq.) to investigate broker-dealer conflicts.
The Harm Requiring Regulatory Response
South Carolina's retiree and military veteran population has significant retirement savings managed through discount brokers, all subject to PFOF practices that benefit a company investing heavily in politicians who oversee financial regulation.
What State Regulators Should Do
The South Carolina Secretary of State, Securities Division, in coordination with the South Carolina Attorney General's office, should:
- Open an investigation into whether broker-dealers serving South Carolina 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 South Carolina residents
- Contact NASAA to explore multistate coordination
- Issue investor education guidance about PFOF practices and how South Carolina investors can protect themselves
- Consider rulemaking under state securities law to require enhanced disclosure of PFOF arrangements affecting South Carolina retail investors
Contacting the South Carolina Secretary of State, Securities Division
South Carolina investors and advocates can contact the South Carolina Secretary of State, Securities Division at https://www.sos.sc.gov/securities to report concerns and request regulatory action on PFOF practices affecting South Carolina residents.