The South Dakota Division of Securities's Authority

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.

The Harm Requiring Regulatory Response

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.

What State Regulators Should Do

The South Dakota Division of Securities, Department of Labor and Regulation, in coordination with the South Dakota Attorney General's office, should:

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

Contacting the South Dakota Division of Securities

South Dakota investors and advocates can contact the South Dakota Division of Securities, Department of Labor and Regulation at https://dlr.sd.gov/securities to report concerns and request regulatory action on PFOF practices affecting South Dakota residents.