Securities Lawyers Blog
We represent clients of financial advisors and brokerage firms in investment disputes against their firms, such as Citadel Securities LLC. Our services cover a wide spectrum of broker misconduct, including unsuitable investments, failure to supervise, and losses in various investment products. Our firm can analyze your brokerage accounts, determine the extent of your investment losses, and understand the issues and remedies available.
Citadel Securities is a broker-dealer focused on market making and liquidity provision in United States options, equities, government securities, and foreign exchange products, along with trade execution services. Formed in Delaware in 2001 and headquartered at 200 South Biscayne Boulevard in Miami, the firm is wholly owned by its affiliate CSHC US and is a clearing member of the Depository Trust Company, National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Options Clearing Corporation.
Citadel Securities LLC – By the Numbers:
- CRD #: 116797
- Regulatory Events: 75
- Arbitration Events: 1
- Broker Employees: 564
Citadel Securities LLC – In the News:
FINRA v. Citadel Securities LLC (Case #2020068778601) – From the start of its Consolidated Audit Trail (CAT) reporting obligation on June 22, 2020, through August 28, 2024, Citadel Securities failed to timely and/or accurately report data for tens of billions of equity and option order events to the CAT Central Repository in violation of FINRA Rules 6830, 6893, and 2010.
FINRA v. Citadel Securities LLC (Case #2019061038301) – From July 2017 through October 2019, Citadel Securities had multiple issues with correctly reporting Treasury transactions to the Trade Reporting and Compliance Engine (TRACE) causing violations of FINRA Rules 6730 and 2010. These issues resulted in the following types of TRACE reporting violations: (i) incorrectly reporting internal transfers as Treasury transactions, when they were not reportable, (ii) failing to append the “No Remuneration” indicator to TRACE reports for certain Treasury transactions between affiliates, and (iii) failing to include the correct contra-party type in its TRACE reports for certain affiliate transactions. Citadel Securities also violated FINRA Rules 3110(a) and (b) and 2010 because its supervisory system, including written supervisory procedures (WSPs), was not reasonably designed to achieve compliance with TRACE reporting rules because it could only detect violations that would generate automatic alerts. In all cases, the incorrect TRACE reports involved internal position transfers or transactions with affiliates, and did not involve transactions with clients.
FINRA v. Citadel Securities LLC (Case #2016051085001) – Between September 14, 2015 and July 21, 2016, Citadel Securities had a system issue that caused it to report approximately 6.5 million equity sale transactions to the FINRA/Nasdaq Trade Reporting Facility (TRF) with an inaccurate short sale indicator in violation of FINRA Rules 6182, 7230A(d), and 2010. The firm also failed to have a supervisory system, including written supervisory procedures (WSPs), that was reasonably designed to achieve compliance with FINRA rules requiring the use of short sale indicators in violation of FINRA Rules 3110 and 2010.
FINRA v. Citadel Securities LLC (Case #2017053653101) – Between April 1, 2016, and May 30, 2017 (the “Review Period”), Citadel violated FINRA Rules 6432 (Supplementary Material.01) and 2010 by failing to demonstrate eligibility of the Exchange Act Rule 15c2-11(f)(2) exception by making a contemporaneous record of the following information in connection with 15,445 quotations: (i) the identity of the person from whom information regarding the unsolicited customer order or indication of interest was received, if applicable; (ii) the date and time the unsolicited customer order or indication of interest was received by the member displaying the quotation; and (iii) the terms of the order that is the subject of the quotation. During the Review Period, the Firm also failed to establish and maintain a system to supervise, including written supervisory procedures (“WSPs”), reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable FINRA rules, with respect to FINRA Rule 6432 (Supplementary Material.01). As a result, the Firm violated FINRA Rules 3110 and 2010.
FINRA v. Citadel Securities LLC (Case #2014041859401) – FINRA Rule 5320 (Prohibition Against Trading Ahead of Customer Orders) and FINRA Rule 6460 (Display of Customer Limit Orders) are designed to, among other things, protect customer orders, promote market transparency, and increase quote competition. In November 2011, Citadel Securities established an Over-the-Counter equity trading desk (the “OTC Desk”) that received orders from the Firm’s broker-dealer clients on behalf of their customers. The Firm sought to program the OTC Desk trading systems to comply with the Trading Ahead and Limit Order Display Rules by providing customer orders automated order protection, quote display, and execution. The OTC Desk, however, implemented controls, settings and processes that removed hundreds of thousands of mostly larger customer orders from those logics. While those controls, settings and processes had multiple purposes, they shared a principal purpose of directing OTC customer orders for manual review and/or handling. Impacted orders were rendered inactive until the completion of a manual trader review. From at least September 2012 to mid-September 2014, the OTC Desk, in many instances, traded ahead of those inactive OTC customer orders in violation of FINRA Rule 5320 and failed to display them as required by FINRA Rule 6460. In addition, from at least October 2012 to September 2018, the OTC Desk failed to display certain customer limit orders as required by FINRA Rule 6460 because of other systems and programming logic. The Firm failed to establish a supervisory system, including written supervisory procedures (“WSPs”), reasonably designed to achieve compliance with Trading Ahead and Limit Order Display Rules for OTC customer orders. Among other things, Citadel Securities did not establish WSPs requiring supervisory reviews of OTC customer orders for compliance with FINRA Rules 5320 and 6460, nor did the Firm establish any supervisory reports or other tools to allow supervisors to monitor whether OTC customer orders were handled in compliance with those rules, until October 2014 and June 2015, respectively. Furthermore, the reports the Firm implemented with respect to the display of OTC customer limit orders in June 2015 were not reasonably designed to achieve compliance with FINRA Rule 6460. By virtue of the conduct described herein, Citadel Securities violated NASD Rule 3010(a) and (b) (for conduct before December 1, 2014); FINRA Rule 3110(a) and (b) (for conduct on and after December 1, 2014); FINRA Rule 5320(a) and (b); FINRA Rule 6460; and FINRA Rule 2010.
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