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Tennessee Regulatory Action

Tennessee Department of Commerce and Insurance, Securities Division: What Tennessee Financial Regulators Should Do About Citadel

The Tennessee Department of Commerce and Insurance, Securities Division has jurisdiction to investigate Citadel Securities' payment for order flow practices affecting an estimated 1.2 million Tennessee retail investors. Here is what state regulators should do — and why.

The Tennessee Department of Commerce and Insurance, Securities Division's Authority

Tennessee Attorney General Jonathan Skrmetti and the Tennessee Securities Division have authority under the Tennessee Securities Act of 1980 (T.C.A. §48-1-101 et seq.) to investigate broker-dealer conflicts.

The Harm Requiring Regulatory Response

Nashville's booming economy and growing professional class includes a significant retail investor population. Tennessee residents face PFOF-based order routing without state enforcement action.

What State Regulators Should Do

The Tennessee Department of Commerce and Insurance, Securities Division, in coordination with the Tennessee Attorney General's office, should:

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

Contacting the Tennessee Department of Commerce and Insurance, Securities Division

Tennessee investors and advocates can contact the Tennessee Department of Commerce and Insurance, Securities Division at https://www.tn.gov/commerce/securities.html to report concerns and request regulatory action on PFOF practices affecting Tennessee residents.

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