Citadel Securities faces new pressure on GameStop frenzy

Texas News Today

Billionaire Ken Griffin’s e-commerce company Citadel Securities has been re-accused of its role in January’s trading frenzy over GameStop stock. Ltd.

As new information emerges in the proceedings.

In a statement Tuesday, Citadel Securities dismissed “Internet conspiracy and Twitter mobbing” accusing the company of promoting Robin Hood markets. Ltd.

On January 28, Gamestop and other brokerage firms restricted trading of other Memetic shares, causing losses to many small investors.

A rare statement was made when the hashtag #KenGriffinLied was trending on Twitter.

The anger was prompted by an internal Robin Hood news agency release last week as part of a proceeding filed by investors affected by the trade sanctions. The proceedings seek damages from Robin Hood and several other brokerage firms, Citadel Securities and certain companies that terminate stock transactions.

Executives at Robinhood and Citadel Securities reported that they spoke in the days before the move on January 28, when they were working on a surge in Mem stock trading volume. The communication doesn’t make it clear what the company talked about, but they show the talk was bitter. In an internal chat message on January 27, Jim Swatvout, president of Robin Hood’s equity brokerage division, said: Absolute confusion. “

Lawyers for the plaintiffs said in a court filing last week that the news agency showed Citadel Securities had pressured Robin Hood to block transactions by small investors.

Citadel Securities, which fulfills a number of orders placed by Robin Hood’s clients, has denied such pressure. In February, the company’s founder and major shareholder, Griffin, said in a written testimony to the House Financial Services Commission that his company would prohibit the trading of “GameStop or other “meme” shares in Robinhood. He had no role in the decision.”

The trading company reiterated the same stance on Tuesday. “Conspiracy theorists and plaintiffs’ attorneys are trying to build an absurd story out of routine communications between Citadel Securities and the brokers who process individual investor orders,” Citadel Securities said in a statement.

The company said discussions with the brokerage firm during GameStop’s euphoria were aimed at ensuring market stability. “As retail transaction engagement has grown phenomenally, each team responds to operational demands and gives individual investors access to Citadel Securities’ superior enforcement capabilities,” Citadel Securities said. where did it go.

A Robin Hood spokesperson denied Tuesday that Citadel Securities had pressured securities firms to impose trading restrictions.

“These complaints try to create a false narrative of collusion, and we work really hard to keep the record true,” she said. “When markets are tense, it is common and wise to approach the market center ahead.”

Robin Hood said it imposed a January 28 trading limit on a $3 billion margin claim from Depository Trust and Clearing Corp., which operates a clearing house for US equity trading. By banning, Robin Hood has reduced the amount of money required to post in the clearinghouse. DTCC backed up Robin Hood’s account.

GameStop’s share price fell 44% on January 28, after several brokerage firms imposed sanctions. This has deterred many investors from buying the stock or increasing their holdings. Video game retailers’ stock prices have risen previously, fueled by widespread campaigns on Reddit and other social media sites where investors have promoted Gamestop and several other stocks.

The episode is expected to prompt several parliamentary hearings and be the subject of a forthcoming report by the Securities and Exchange Commission.

Electronic trading companies, such as Citadel Securities, give retail brokers the right to place orders for their clients’ stocks and options. This is a practice called order flow payment. SEC Chairman Gary Gensler said the agencies are considering paying order flows as part of a comprehensive review of US stock market structure due to the Memstock incident.

After GameStop’s trading frenzy, the SEC is expected to revisit order flow payments, a decades-old practice that is central to how fee-free trading works. Growth. The WSJ explains what it is and critics say it’s bad for investors. Illustration: Jacob Reynolds / WSJ

write to Alexander Osipovich ([email protected])

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