South Dakota Investor Alert

Citadel Securities and South Dakota 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 155,000 South Dakota retail investors. Here is what South Dakota residents need to know.

How PFOF Affects South Dakota Investors

South Dakota is known for favorable financial industry laws — but its retail investor population deserves protection from undisclosed PFOF practices just as much as investors in more regulated states.

The Scale in South Dakota

South Dakota has an estimated 155,000 South Dakota 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.

South Dakota's financial hub in Sioux Falls has sophisticated financial professionals who understand these dynamics. But most South Dakota retail investors — those in Rapid City, Aberdeen 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 South Dakota

Kenneth Griffin has given contributions to Governor Noem and national Republican organizations. His key recipients include Governor Kristi Noem and the Republican Governors Association. 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 South Dakota.

Kristi Noem (R-SD Governor) — $50,000 (2022, South Dakota Governor)
Republican Governors Association — $500,000 (2022, Federal Super PAC)

What South Dakota Regulators Could Do

South Dakota Attorney General Marty Jackley and the South Dakota Division of Securities have authority under the South Dakota Uniform Securities Act (S.D.C.L. Ch. 47-31B) to investigate broker-dealer practices.

What South Dakota Investors Can Do Now

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

File a complaint with the South Dakota Division of Securities at https://dlr.sd.gov/securities
File a complaint with the South Dakota Attorney General at https://atg.sd.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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