The Washington State Department of Financial Institutions, Securities Division's Authority
Washington Attorney General Nick Brown and the Washington DFI Securities Division have authority under the Washington Securities Act (RCW Chapter 21.20) to investigate broker-dealer practices. Washington has historically been among the more active states on securities enforcement.
The Harm Requiring Regulatory Response
Washington's tech sector — Amazon, Microsoft, Boeing employees — represents some of the nation's most active retail investors. These sophisticated investors are entitled to best execution and transparent order routing — not undisclosed PFOF arrangements.
What State Regulators Should Do
The Washington State Department of Financial Institutions, Securities Division, in coordination with the Washington Attorney General's office, should:
- Open an investigation into whether broker-dealers serving Washington 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 residents
- Contact NASAA to explore multistate coordination
- Issue investor education guidance about PFOF practices and how Washington investors can protect themselves
- Consider rulemaking under state securities law to require enhanced disclosure of PFOF arrangements affecting Washington retail investors
Contacting the Washington State Department of Financial Institutions, Securities Division
Washington investors and advocates can contact the Washington State Department of Financial Institutions, Securities Division at https://dfi.wa.gov/securities to report concerns and request regulatory action on PFOF practices affecting Washington residents.