The Chicago Tribune just published a piece explaining exactly what retail investors have been warning the SEC about.
Citadel Securities’ dark pool dominates a big part of the financial world, accounting for as much as half of U.S. stock market activity.
The Chicago Tribune says this prominent dark pool is run by Chicago Billionaire Ken Griffin’s Citadel Securities and has been targeting small scale retail investors.
And they’re not wrong.
Dark pools are typically involved in payment for order flow (PFOF), where they pay broker firms to receive retail order flow.
Brokers such as Robinhood and TD Ameritrade accept payment for order flow.
But retail investors have now brought these nefarious practices in the market to light.
Let’s discuss it.
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Taking down Citadel’s dark pool
The Chicago Tribune has acknowledged investors’ orders almost never make it to the New York Stock Exchange (NYSE) or NASDAQ.
The editorial team say they get redirected to electronic platforms run by private market makers who match buyers with sellers at a price they determine, behind closed doors.
Citadel Securities’ dark pool is able to make money on the difference between bid and ask prices when trades are matched.
This creates major conflict of interest as the orders they fill are not competing against one another; therefore, the price is open for manipulation.
SEC Chairman Gary Gensler said himself 90% to 95% or retail’s orders do not get processed through the lit exchange.
And although light is shining on this very real problem, nothing is being done about it by our regulators yet.
“The U.S. Securities and Exchange Commission is responsible for revising its rules to keep up with technology and, here’s a surprise, the regulators have fallen behind.” – The Chicago Tribune.
But the editor says the problem is the SEC has too much on their hands and are spreading themselves thin.
They’re focused on crypto regulation, SPACs, and climate control.
It’s rather clear dark pools are not the SEC’s main priority.
Citadel Scandal
Citadel has been heavily scrutinized by retail investors for not only heavily shorting ‘meme stocks’, but for suppressing the price driven by retail demand with its dark pool.
#KenGriffinLied began trending on Twitter earlier this year and again this month when the U.S. House Committee on Financial Services released a report confirming Robinhood and Citadel did indeed have blunt negotiations prior to trading restrictions on January 28th of 2021.
The “GameStopped” report documents in detail the events that lead to the halting of ‘meme stocks’.
Ken Griffin swore under oath that Citadel and Robinhood had no communication the day prior to the restrictions, but proof has now surfaced.
The question now is, will the case dismissed by Judge Cecilia Altonaga late last year get reopened?
The Miami district court judge admitted the Citadel and Robinhood transcripts were suspicious.
However, the federal court has dismissed the case due to a lack of evidence.
According to Business Insider, the court said that the evidence between Citadel Securities and Robinhood was not sufficient.
The retail community found Judge Cecilia Altonaga had ties to the defendant in the Robinhood and Citadel case, creating a major conflict of interest.
But mainstream media isn’t covering this.
What can be done about this corruption in the market?
If you’ve been one of my day-ones, you know I’ve always preached raising awareness.
Raising awareness is what gets people to learn, dive deep, and stand against market injustices.
People want to fight for a cause, people want to fight for freedom.
Instead of focusing on the things that are out of our control (SEC, market manipulation, etc.), we must focus on the things that are in our control.
And that is raising awareness to educate the population.
I truly believe this is the way to creating real change.
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It all starts with us, one by one, as individuals.
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About The Author
Call me crazy…. But 6 almost 7 years ago, I wrote a small piece on how it seems that our government thinks that a revolution is below us as modern-day American’s. But here we are today with all the right ingredients. It has always been in the back of our minds somewhere that the stock market, was rigged.
And now everything that we ever thought was true and then some. It’s just my opinion, if the government doesn’t right this ship, and very soon something very bad is going to happen to our Nation. That’s if it’s not already too late.
You would be hard pressed to find a rich person that didn’t get that way by lying, cheating and stealing. And they are the minority. Certain Financial Institutions, such as Hedge funds, have stripped all of the liquidity out of the OTC.
The same Institution’s that have broadened the gap between the rich and poor, destroying our great Nation. While our government stands idly by totally complicit about the whole thing, all the while enriching themselves.
The story below addresses the corruption angle of WS trading. Yahoo Finance (BA) has deleted my comment/story 3 times, but it is online, so difficult to hide.
“Brokers Get Unfair Profits From Lending Stock, Pension Funds Say”
By Bill Alpert (per barrons.com)
Updated July 7, 2022 8:28 am ET / Original July 7, 2022 2:00 am ET
“Five of Wall Street’s biggest brokers are a step closer to defending class-action claims that they conspired to wring unfair profits from the nearly $2 trillion dollar market for stock loans.
A successful class-action case could crimp profits at the prime brokerage units of defendants Goldman Sachs GS +0.41% (ticker: GS), Morgan Stanley (MS), UBS (UBS), the J.P. Morgan JPM +2.13% unit of JPMorgan Chase (JPM), and the Merrill Lynch unit of Bank of America (BAC).”
If one wants clean trade execution, then use a broker. services that offer “free” trades are always the most expensive. Anyone who knows anything about finance understands this. No one is forced to use garbage services such as Robin Hood. No one should, but there are those who obviously want to. Let them waste their money. We do not stop people from getting ripped off on other types of “deals,” so why intervene here?
When the Judge sleeps with the Devil!
The Tribune just published a piece? The editorial was published in February 2022.
The dark pool should be lit up like the fourth of July.
Is is it a crime if they’re not held accountable? My faith in the US government and the US stock exchange has been greatly reduced by what I’ve seen through the Manipulation of AMC and GameStop
Let’s start a discussion! Leave your thoughts below.
Frank … what proof do you have that Ken Griffin lied under oath that Citadel and Robinhood had no communication the day prior to the restrictions???