Tag: Citadel News

Global Head of Operations at Citadel Has a Board Seat at DTCC

Market News: Conflicts of interest arise - #CitadelScandal
Market News: Conflicts of interest arise – #CitadelScandal

David Inggs is Global Head of Operations at Citadel and is responsible for all products across asset servicing, billing, cash management, clearing, and has a board seat at the DTCC.

The conflict of interest has raised big concerns amongst the retail investor community online as Citadel has been a leading and one of the biggest short sellers in the stock market.

On January 28th, 2021, The DTCC waived $9.7 billion of collateral deposit, limiting institutional losses and limiting retail profits during the ‘meme stock’ frenzy.

The organization allowed several naked shares to flood the market prior to the massive jump in share prices only to help financial institutions in the end.

Citadel and Melvin Capital who shut down last year, lost billions during the event.

Melvin was crippled throughout 2022 from its severe losses in GameStop the year prior.

Had the DTCC not stepped in, the hedge fund would have closed that same year.

“Anyone shorting AMC or GameStop is out of their mind. Wallstreetbets is too powerful, and trying to bet against them right now is just giving them more ammo”, said Jim Cramer.

Since the halt of ‘meme stocks’, the retail community has been uncovering a variety of conflicts of interest too big to ignore.

Who is David Inggs?

David Inggs DTCC

David Inggs is Global Head of Operations at Citadel and is responsible for all products across asset servicing, billing, cash management, clearing, Collateral Management, Reconciliation & Control and Settlements and is on the Board of Directors at the DTCC.

Prior to joining Citadel, David served as Chief Operations Officer of E*TRADE where he led operations globally across Trade Execution, Global Clearing, Middle Office and Shared Services, among other functions.

David spent most of his career at Goldman Sachs, where he was a Managing Director and held numerous leadership positions over the course of a decade, including Global Head of Clearing Operations and Head of Credit Default Swaps and Equity Derivative Operations.

David also worked at Morgan Stanley, where he served as an Executive Director and Head of Global Bank Loans, in addition to work in credit derivatives and collateral management.

The Global Head of Operations at Citadel has worked for every major criminal financial institution that has been too big to face serious consequences from fraud or market manipulation in the past.

Retail investors say this is market injustice and regulators are part of the problem.

Who is the DTCC?

The DTCC (Depositary Trust and Clearing Corporation) is an American post-trade financial services company providing clearing and settlement services to the financial markets.

The DTCC processes trillions of dollars of securities on a daily basis.

As the centralized clearinghouse for various exchanges and equity platforms, the DTCC settles transactions between buyers and sellers of securities.

The information is recorded by its subsidiary, the NSCC.

After the NSCC has processed and recorded a trade, they provide a report to the brokers and financial professionals involved.

This report includes their net securities positions after the trade and the money that is due to be settled between the two parties.

Clearing corporations such as the DTCC may receive cash from a buyer and securities or futures contracts from a seller.

The clearing corporation then manages the exchange and collects a fee for this service.

The size of the fee is dependent on the size of the transaction, the level of service required, and the type of security being traded. 

Investors who make several transactions in a day can generate significant fees.

This means every naked share that has been created on the ‘short side’ has been recorded and bypassed by the DTCC/NSCC, all for a fee.

Related: Robinhood and Citadel Colluded Night Prior to Trading Restrictions

GameStopped

DTCC GME
DTCC GME Halt – GameStopped.

A press released was published advising of the circumstances that occurred during the time ‘meme stocks’ were halted.

The DTCC waived $9.7 billion of collateral deposit requirement on January 28th, 2021, limiting institutional losses and limiting retail profits.

While AMC Entertainment stock was able to surge months after the January event, GameStop shareholders were strongly affected by the halts.

Retail investors say they feel cheated from regulators who failed to let the short squeeze play out in their favor.

Conflicts of interest such as David Inggs’ involvement with Citadel and the DTCC could be seen as a detriment to market integrity.

In an interview with ‘We The Investors’, SEC Chairman Gary Gensler said one proposal they’re looking at this year involves tackling conflicts of interest in the financial markets.

Citadel processes more than 40% of retail’s orders through PFOF (payment for order flow), and with a bias towards short selling, gives the hedge fund an incredible advantage over the common investor.

Should the involvement between both Citadel and the DTCC be considered a crime?

Or is this just a coincidence?

Leave your thoughts below.

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These Hedge Funds Have Been Wiped Out in 2022

Market News: These Hedge Funds have been underperforming all year | Frankenz.com.
Market News: These Hedge Funds have been underperforming all year | Frankenz.com.

Which hedge funds have been underperforming in 2022?

Hedge fund Tiger Global Management is down -54% for the year despite gaining 1.4% in November according to Bloomberg sources.

Persons familiar with the matter say the firm’s long-only fund rose 5.1% in November.

The hedge fund has been on a steady decline all year.

In April, the firm sunk -34% after a bad run that was fueled by massive bets on stocks that have been hammered, such as fast-growing tech companies in the U.S and China.

Tiger Global lost -7% last year, its first annual drop since 2016 and its third total.

Tiger Global Losses 2007-2021 | Sources: Bloomberg News, Curated by Franknez.com.
Tiger Global Losses 2007-2021 | List of Underperforming Hedge Funds – Sources: Bloomberg News, Curated by Franknez.com.

CEO Chase Coleman’s personal wealth dropped by $1.3 billion early this year, according to calculations by the Bloomberg Billionaires Index. 

But Tiger Global isn’t the only hedge fund that is underperforming in 2022.

Here are other hedge funds facing significant losses in 2022.

Which hedge funds have been losing money this year?

List of worst performing hedge funds in 2022 | Franknez.com.
List of worst performing hedge funds in 2022 – Underperforming Hedge Funds | Franknez.com.

Tiger Global Management and Whale Rock Capital Management were among stock-picking hedge funds to report significant losses in 2022.

In September, Tiger Global saw losses as high as -66.5%, per Bloomberg.

Whale Rock widened its losses to -41%.

A report conducted in March concluded that almost 80% of active hedge fund managers are underperforming major indexes such as the S&P 500.

Which hedge funds have been underperforming?

Below is a list of other hedge funds underperforming in 2022.

Other hedge funds include:

  • Light Street Capital Management -50%
  • Maverick Capital -27%
  • Third Point -21.10%

Melvin Capital closed its doors in June of 2022 after it failed to make up for significant losses after it had bet against GameStop.

Anchorage Capital is another hedge fund that closed after betting against another ‘meme stock’, AMC Entertainment Holdings, Inc.

It closed its doors after 18 years when it could no longer provide their clients with the ability to withdraw their capital.

Hedge funds are heading for one of their worst years of performance on record, leaving investors frustrated with how many managers have failed to offset sharp falls in equity and bond markets,” says Financial Times.

It’s only a matter of time before we begin to see more hedge funds close their doors leading into 2023.

But I’d love to hear your thoughts.

Leave a comment down below.

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Biotech Company Suing Citadel Over Market Manipulation

Citadel Market Manipulation
Market News: Biotech Company sues Citadel for market manipulation.

Biotech company Northwest Biotherapeutics is suing Citadel and other market makers for allegedly manipulating its stock price.

The company is accusing Citadel Securities LLC, Susquehanna, Virtu, and other Wall Street firms of driving its stock price down through the use of various illicit trading activities.

One being ‘spoofing‘ orders.

The lawsuit was filed on Thursday in Manhattan federal court. 

Northwest Biotherapeutics alleged the market makers had repeatedly engaged in “spoofing,“ where traders place orders with an intent to fool other investors about a stock’s demand and manipulate the price.

Northwest, whose shares trade over the counter, also sued Canaccord Genuity Inc., G1 Execution Services LLC, GTS Securities LLC, Instinet LLC, Lime Trading Corp. and Virtu Americas LLC.

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Citadel’s Market Manipulation History

Citadel market manipulation
Stock Market News: Citadel accused of market manipulation | Citadel lawsuit + more.

The lawsuit comes as no surprise to the retail community as Citadel has a long history of market manipulation.

From getting accounts suspended in China to settling charges of misconduct and abusing their power in the U.S. markets, Citadel has done it all.

Spoofing was outlawed in 2010 so the practice has since been illegal.

In March, the DOJ targeted hedge fund Muddy Waters for flooding the market with fake shares.

In August, a federal jury in Chicago convicted two former JPMorgan traders who had been charged with spoofing in the gold market.

Now Citadel and others are being accused of using spoofing tactics to drive down the price of Northwest Biotherapeutics.

Will these Wall Street giants receive the same consequences as JPMorgan’s former traders?

I’m curious to know what you think.

Leave your thoughts in the comment section down below.

Related: How Bloomberg’s Beloved Citadel Securities Manipulates the Market

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Source: WSJ


Citadel to Launch Crypto Exchange After FTX Collapse

Crypto News: Citadel and Partners to launch EDXM Crypto Exchange.
Crypto News: Citadel and Partners to launch EDXM Crypto Exchange.

Citadel is partnering up with Charles Schwab, Fidelity, Sequoia, Paradigm, and Virtu to launch EDXM, a cryptocurrency exchange.

The fall of FTX was primarily due to centralized players so what’s to say EDXM won’t be subject to such errors?

EDXM’s custody and wallet technology is being provided by crypto custody and infrastructure company Paxos, the companies announced in October.

Paxos, which is a custodian regulated by New York state, holds customer accounts in fully segregated accounts and has signed up large consumer-facing clients to enable crypto trading.

Its customers include PayPal, broker dealers such as Interactive Brokers, and others such as Nubank and Mastercard.

Crypto is still a taboo area for most of Wall Street, but with companies such as Citadel and its partners, it could attract big institutional money.

Here’s the latest crypto news.

Related: How to Invest in Cryptocurrency for Beginners

What is EDXM?

Citadel to launch crypto exchange EDXM
Citadel to launch crypto exchange EDXM.

EDXM is a new crypto exchange being developed by Wall Street giants such as Citadel, Virtu, and Fidelity for digital assets such as cryptocurrencies.

EDXM plans to offer delivery settlement versus payment settlement, a settlement method that’s used in traditional securities trading.

Other promises include extremely low transaction fees due to tight spreads enabled by greater liquidity.

The crypto exchange is also supposed to be different from some other crypto providers that are the market maker, exchange, and custodian all in one, which can be a conflict of interest and is typically not done in traditional markets.

Sort of like how Citadel is a market maker, hedge fund, and dark pool.

The head of strategy at Paxos says EDXM will provide transparency for the crypto market.

Some investors might argue that Citadel and its partners should provide more transparency in the stock market first before making such claims for the cryptocurrency market.

While some on Wall Street might think EDXM could lift the crypto industry, others look at the partnership as a means for Wall Street to take advantage of investors elsewhere.

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Citadel Has a Long History of Market Manipulation

Citadel Market Manipulation
Market News: Citadel and friends are entering the crypto space | Ken Griffin.

Citadel and friends are entering the crypto world very soon.

EDX Markets plans to bring ‘traditional finance’ to the crypto space, a not so ‘traditional’ space to begin with.

The exchange made up of Citadel, Sequoia, Paradigm, Virtu, Charles Schwab, and Fidelity is debuting in November.

EDX Markets will start trading a limited number of spot, crypto tokens starting with a November trial period, with the official launch in January, per Bloomberg.

Similar to trading equities and options, EDX will allow investors to buy and sell digital assets through their existing broker dealer, rather than an outside venue or directly through a crypto-native exchange. 

“We’re taking some of the best features of traditional finance and bringing it to the digital markets to make it more efficient, and bring that cost saving to investors,” Nazarali said.

Nazarali is the former global head of business development at Citadel Securities.

But as many are aware, these financial institutions have a long history of playing unfair.

Will these sharks taint the crypto space too?

Let’s look at Citadel’s market manipulation history.

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Citadel Market Manipulation

2015

In 2015, an account operated in China by the brokerage arm of US hedge fund Citadel was suspended.

It was the latest casualty of regulators’ hunt for market manipulators and short sellers at the time.

The China Securities Regulatory Commission said that the Shanghai and Shenzhen stock exchanges had suspended 24 accounts as part of a probe into high-frequency trading.

The investigation focused on a practice known as “spoofing” in which an investor submits a buy or sell order but then withdraws it before a sale is completed — a practice that can mislead investors by creating the false impression that a stock is trading at a particular price.

Citadel confirmed that one of its accounts managed by Guosen Futures was among those suspended.

2017

SEC Citadel

In 2017 Citadel paid the SEC $22.6 million to settle charges of misleading conduct.

The hedge fund misled customers about the way it priced trades.

The SEC found that between 2007 and 2010, Citadel used two algorithms to execute stock trades on customers’ behalf that gave investors a worse price for their trades, even when Citadel knew better prices existed elsewhere.

“This affected millions of retail orders,” said Stephanie Avakian, the acting director of enforcement at the SEC at the time.

Citadel neither admitted nor denied the findings.

2021

In 2021, Failure-to-Delivers (FTDs) rose dramatically in the period leading up to January 28th, 2021, a phenomenon consistent with increasing short interest by market makers such as Citadel Securities.

FTDs are indictive of naked short selling, which occurs when a short seller does not actually possess the security it is supposed to borrow.

This practice is largely inaccessible to individual investors but accessible to market makers.

At the time, Citadel, Robinhood, and others restricted retail investors from buying ‘meme stocks’ in order to prevent escalating institutional losses.

Citadel eventually lost billions after betting against AMC Entertainment in 2021.

But the entire system needs a refresh – The DTCC waived a total of $9.7 billion of collateral deposit requirements on January 28, 2021, saving brokers, and screwing up retail investors.

2022

The Chicago Tribune 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 been bringing these nefarious practices in the market to light.

Related: Biotech Company Suing Citadel Over Market Manipulation

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