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Washington D.C. Regulatory Action

DC Department of Insurance, Securities and Banking: What Washington D.C. Financial Regulators Should Do About Citadel

The DC Department of Insurance, Securities and Banking (DISB) has jurisdiction to investigate Citadel Securities' payment for order flow practices affecting an estimated 150,000 DC retail investors — disproportionately employed in government and policy roles. Here is what state regulators should do — and why.

The DC Department of Insurance, Securities and Banking's Authority

DC Attorney General Brian Schwalb and the DC DISB have authority under the DC Securities Act (D.C. Code §31-5601.01 et seq.) to investigate broker-dealer practices. DC's unique position as both a political and regulatory center makes its AG a critical voice in any PFOF investigation.

The Harm Requiring Regulatory Response

DC retail investors — including government regulators, congressional staffers, and policy professionals — have a unique window into the gap between Citadel's political influence and regulatory action. DC residents deserve the same investor protections as residents of the 50 states.

What State Regulators Should Do

The DC Department of Insurance, Securities and Banking (DISB), in coordination with the Washington D.C. Attorney General's office, should:

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

Contacting the DC Department of Insurance, Securities and Banking

Washington D.C. investors and advocates can contact the DC Department of Insurance, Securities and Banking (DISB) at https://disb.dc.gov to report concerns and request regulatory action on PFOF practices affecting Washington D.C. residents.

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