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Posted On: 02/14/2017 6:34:29 PM
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http://www.chicagobusiness.com/article/201701...ec-charges
Citadel Securities pays $22.6 million to settle SEC charges
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By LYNNE MAREK
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Citadel Securities agreed to pay $22.6 million to settle charges by the Securities and Exchange Commission that it "made misleading statements" in filling orders for retail customers, the agency said.
Chicago-based Citadel Securities, led by billionaire Ken Griffin, told brokers for which it was handling orders that it was providing the main-street investors with the best stock prices available when it filled orders, but that wasn't the case for millions of orders it handled, according to the SEC's statement. The activity occurred between late 2007 and January 2010 and Citadel has since stopped two ways of handling the orders that were resulting in investors not getting the best price, the agency said.
"Today, Citadel Securities resolved an issue related to the adequacy of certain disclosures," the company said in a statement. "We take very seriously our obligations to comply with all laws and regulations."
Without admitting or denying the SEC findings, the company agreed to be censured and pay $5.2 million to disgorge "ill-gotten gains" plus $1.4 million in interest, and a penalty of $22 million, the agency said.
Still, the SEC noted only a "small part" of the orders executed by Citadel, which handles about 35 percent of average daily equity volume in U.S. markets, during the period were affected by the inadequate disclosure to brokers.
Citadel is best known as the city's biggest hedge fund, but Griffin also controls Citadel Securities where these activities were carried out by a separate one of his businesses involved with high-speed market-making to buy and sell various securities and derivatives on markets all over the world. The SEC charges were focused on the market-making unit of the company.
Read more:
• Citadel results beat average
• New hedge fund venture led by Citadel alum
Citadel Securities pays brokers for retail order flow and then either fills the order from its own inventory or fills it by tapping prices at stock exchanges other brokers. For instance, last year Citadel Securities was receiving orders from TD Ameritrade and Scottrade.
Payment for order flow, which is practiced by other brokers too, has been controversial in the past, and high-speed traders generally attracted regulatory scrutiny after the 2010 Flash Crash sent stocks plummeting before they rebounded.
Other companies have been taken to task by the SEC for similarly misleading investors in handling orders. Last year, the agency and the New York Attorney General settled similar charges with the large international banks Barclays and Credit Suisse, forcing them to pay $70 Million and $84.3 million, respectively.
In the case of Citadel Securities, the SEC said sometimes the firm gave investors better prices and sometimes worse, noting that the sanctioned behavior only affected 2.6 percent of the retail orders handled between mid 2008 and January 2010.
Thompson Coburn Attorney Renato Mariotti, who has worked with Citadel in the past, said he considered this SEC action a 'slap on the wrist' by an agency eager to clear up matters before a new administration arrives when President-Elect Donald Trump takes office later this month.
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http://www.chicagobusiness.com/article/201701...ec-charges
Citadel Securities pays $22.6 million to settle SEC charges
Comments Email Print
By LYNNE MAREK
SHARE
Facebook1
LinkedIn4
Google +0
citadel.jpg
Photo by Bloomberg
Citadel Securities agreed to pay $22.6 million to settle charges by the Securities and Exchange Commission that it "made misleading statements" in filling orders for retail customers, the agency said.
Chicago-based Citadel Securities, led by billionaire Ken Griffin, told brokers for which it was handling orders that it was providing the main-street investors with the best stock prices available when it filled orders, but that wasn't the case for millions of orders it handled, according to the SEC's statement. The activity occurred between late 2007 and January 2010 and Citadel has since stopped two ways of handling the orders that were resulting in investors not getting the best price, the agency said.
"Today, Citadel Securities resolved an issue related to the adequacy of certain disclosures," the company said in a statement. "We take very seriously our obligations to comply with all laws and regulations."
Without admitting or denying the SEC findings, the company agreed to be censured and pay $5.2 million to disgorge "ill-gotten gains" plus $1.4 million in interest, and a penalty of $22 million, the agency said.
Still, the SEC noted only a "small part" of the orders executed by Citadel, which handles about 35 percent of average daily equity volume in U.S. markets, during the period were affected by the inadequate disclosure to brokers.
Citadel is best known as the city's biggest hedge fund, but Griffin also controls Citadel Securities where these activities were carried out by a separate one of his businesses involved with high-speed market-making to buy and sell various securities and derivatives on markets all over the world. The SEC charges were focused on the market-making unit of the company.
Read more:
• Citadel results beat average
• New hedge fund venture led by Citadel alum
Citadel Securities pays brokers for retail order flow and then either fills the order from its own inventory or fills it by tapping prices at stock exchanges other brokers. For instance, last year Citadel Securities was receiving orders from TD Ameritrade and Scottrade.
Payment for order flow, which is practiced by other brokers too, has been controversial in the past, and high-speed traders generally attracted regulatory scrutiny after the 2010 Flash Crash sent stocks plummeting before they rebounded.
Other companies have been taken to task by the SEC for similarly misleading investors in handling orders. Last year, the agency and the New York Attorney General settled similar charges with the large international banks Barclays and Credit Suisse, forcing them to pay $70 Million and $84.3 million, respectively.
In the case of Citadel Securities, the SEC said sometimes the firm gave investors better prices and sometimes worse, noting that the sanctioned behavior only affected 2.6 percent of the retail orders handled between mid 2008 and January 2010.
Thompson Coburn Attorney Renato Mariotti, who has worked with Citadel in the past, said he considered this SEC action a 'slap on the wrist' by an agency eager to clear up matters before a new administration arrives when President-Elect Donald Trump takes office later this month.
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"The Preamble
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."
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The Flag
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Quote:
If the broker-dealer fails to deliver for 13 days, the regulation imposes a “close out” duty to purchase and deliver securities “of like kind and quantity.”
https://www.bloomberg.com/opinion/articles/20...ify%20wall
https://www.scotusblog.com/case-files/cases/m...v-manning/
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