The Alleged Violations
According to public sources documenting Citadel's 2020 regulatory record, the firm was cited for: failing to close failure-to-deliver positions; naked short selling (or alleged naked short selling); inaccurate reporting of short-sale indicators; executing trades during circuit-breaker halts; and failing to offer clients best prices on the bid-ask spread. Regulators imposed censures and fines totaling slightly less than $1 million for this conduct.
Naked Short Selling Allegations
Naked short selling — selling shares short without first locating them for borrowing — is prohibited under Reg SHO. Citadel Securities' 2020 regulatory record includes allegations or findings related to short-sale compliance. These are matters of public regulatory record. The Ethics Reporter uses the term 'alleged' or 'found' depending on whether the record indicates an admission, a finding, or an allegation.
Circuit-Breaker Trading
U.S. markets employ automatic circuit breakers — trading pauses triggered when certain stock prices move beyond defined thresholds. Trading during a circuit-breaker halt is prohibited. Citadel's 2020 regulatory record includes findings related to trading during such halts, according to public information.
China Settlement
Also in 2020, Citadel Securities paid a 670-million-yuan settlement (approximately $97 million at the time) to Chinese regulators for trading irregularities dating from 2015, according to public reporting. This settlement was separate from U.S. regulatory actions and reflected the firm's global trading operations.