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Not a good week for Ken Griffin

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Illinois

* This state’s wealthiest resident has made billions and billions of dollars off of market-making. Here’s CNN…

The agency that oversees Wall Street has proposed major changes to the way millions of everyday investors buy and sell stocks. That could be bad news for so-called free-trading apps like Robinhood as well as the lesser known firms that underpin their business models.

Trading could be made fairer for everyday retail investors with some tweaks to the stock market’s plumbing, Securities and Exchange Commission Chair Gary Gensler said at the Piper Sandler Global Exchange Conference in Washington Wednesday. Gensler asked the SEC to consider giving retail traders access to some of the perks available only to the biggest players on Wall Street, including the ability to buy stocks for fractions of a penny, get better visibility into the market’s mechanics and invite more buyers and sellers to ensure everyday investors are getting the best price on a purchase or sale. […]

Here’s how it works: When you tap buy or sell, Robinhood (or your broker of choice), takes your order to a firm known as a wholesaler or market maker — the middlemen who are supposed to get you the best price and who pay the brokers for the privilege of executing the trades. They typically make pennies off each transaction.

That process is known as “payment for order flow,” and it has come under intense scrutiny by regulators following the fallout from the January 2021 run-up in meme stocks like GameStop. […]

Gensler and other critics of the process say the brokers and market makers, such as Citadel Securities, have a clear conflict of interest, and that payment for order flow screws over everyday investors while amassing huge wealth for Wall Street firms.

The SEC is considering whether to add more competition at the middleman level to ensure retail investors are actually getting the best prices. In that scenario, orders would be routed into auctions where trading firms would have to compete to execute them.

posted by Rich Miller
Thursday, Jun 9, 22 @ 11:34 am

Comments

I hope this doesn’t cost him $45M. I’d hate to see that amount wasted twice.

Comment by Lurker Thursday, Jun 9, 22 @ 11:44 am
Hey Ken, we’re coming to “take it back”.

Comment by PublicServant Thursday, Jun 9, 22 @ 11:44 am
Cue the world’s smallest violin for Ken Griffin…

Comment by ??? Thursday, Jun 9, 22 @ 11:47 am
Citadel and Robinhood executives should be facing jail time over the GameStop incident.

Comment by Excitable Boy Thursday, Jun 9, 22 @ 11:48 am
===$45M===

50

Comment by Rich Miller Thursday, Jun 9, 22 @ 11:49 am
Citadel has been under SEC investigation over Robinhood and Gamestop for the last year.

Comment by Publius Thursday, Jun 9, 22 @ 11:50 am
Insert Jerry Seinfeld “That’s a shame” GIF here.

Comment by Roadrager Thursday, Jun 9, 22 @ 11:51 am
“”Gensler and other critics of the process say the brokers and market makers, such as Citadel Securities, have a clear conflict of interest, and that payment for order flow screws over everyday investors while amassing huge wealth for Wall Street firms.”"

Classic argument about making money off selective access to what could be considered a utility architecture. Long-term lifecycle of such innovations and successes as Edison, Ma Bell, etc.

Comment by walker Thursday, Jun 9, 22 @ 11:54 am
Robinhood users thought their trading was free, but it wasn’t. Irvin thought the campaign money was free, but it wasn’t. Griffin through the money he made from order flow was free, but it wasn’t. Free can be very expensive, sometimes.

Comment by AC Thursday, Jun 9, 22 @ 12:03 pm
This is an interesting proposal.

When the courts gut the SEC, which seems to have mostly slipped under the radar in most circles, then the only option left after removing the ability of the SEC to impose restrictions on hedge funds and market makers is to just give the perks given to hedge funds to everyone else.

Hopefully this will advance past its current proposal stage, into a real application of rules.

Comment by TheInvisibleMan Thursday, Jun 9, 22 @ 12:05 pm
Ken Griffin = Mortimer Duke

Comment by Anonsense Thursday, Jun 9, 22 @ 12:05 pm
This ties in with the kind of High Frequency Trading done by Griffin’s firm and a few others with the massive computers and complex programs required. Basically it’s been a money machine. Also recall the recent story about Griffin’s firm trying to get new antenna in Aurora to make things even faster for more of an edge. Griffin reportedly denied but I suspect he was just choosing words carefully. Maybe some affiliate or subsidiary behind it, but not the entity he denied being involved. https://www.theatlantic.com/business/archive/2014/04/everything-you-need-to-know-about-high-frequency-trading/360411/

Comment by Cindy Thursday, Jun 9, 22 @ 12:10 pm
If you recognize
1) that stock trading is a form of casino gambling, and
2) that in casino gambling the house always wins,
you will be
A) unsurprised that the fix was in, and
B) doubtful that regulating on the margins can or will correct that.

IMHO, YMMV, Etc.

– MrJM

Comment by MisterJayEm Thursday, Jun 9, 22 @ 12:20 pm
How can they do this to the guy who created one of the most important companies in the world. /s

TheInvisibleMan you really hit a key point here, the SEC is going to be eviscerated and it will help guys like Griffin become wealthier.

Comment by ArchPundit Thursday, Jun 9, 22 @ 12:21 pm
There’s that Pritzker or DGA ad talking about Griffin making millions or billions off of Mayor Irvin, with the closing of “the more we learn, the worse it gets” or something like it. That closing was used in another commercial also, possibly, turning into a theme. Already past tired of TV ads.

Comment by Grandson of Man Thursday, Jun 9, 22 @ 12:37 pm
Anon - Thursday, Jun 9, 22 @ 12:32 pm:

Ugh, more body shaming. The Gov is a decent and honorable man, KG is most definitely a financial predator. Who do voters want to control government? Bon Appetite to the SEC on reining in the sharks like Citidal. A pox on the SC if/when they gut another department and set of laws.

Comment by froganon Thursday, Jun 9, 22 @ 12:40 pm
why do you say JB is a decent and honorable man. Do honorable men cheat on their taxes?

Comment by Anon Thursday, Jun 9, 22 @ 12:46 pm
Anon @12:32: This ain’t Facebook, take your cheap shots there.

Comment by Northsider Thursday, Jun 9, 22 @ 12:57 pm
@ArchPundit - The appeals courts already have. That’s why the SEC is now shifting into making proposals like this.

One more step to the SCOTUS and it’s official.

“In a recent decision, Jarkesy v. SEC, the Court of Appeals for the Fifth Circuit ruled that important components of the SEC’s enforcement regime for securities fraud cases are unconstitutional, presenting key questions about the future of administrative enforcement actions brought by the SEC and other federal agencies.”

Comment by TheInvisibleMan Thursday, Jun 9, 22 @ 1:01 pm
I don’t want to relitigate this but since when is utilizing an option to prove your house is uninhabitable, an option available to and utilized by many others, the equivalent of tax cheating?

Let’s face it, you don’t like JB and are willing to mischaracterize his actions and accomplishments as well as body shame in a desperate attempt to convince others to join in your dislike. Those tactics don’t tend to work too well here.

Comment by Original Rambler Thursday, Jun 9, 22 @ 1:01 pm
This potential threat to Griffin’s livelihood from the SEC is a much bigger fish for him to fry than throwing more good money after bad on a collapsing Irvin candidacy, which may explain why he has apparently decided to shut off the spigot.

Comment by Strategy Geek Thursday, Jun 9, 22 @ 1:03 pm
Northsider I know it’s not Facebook. Facebook is not a shill for the corrupt Illinois Government. Mike McClain Lifetime Golden Horshoe Award anyone?

Comment by Anon Thursday, Jun 9, 22 @ 1:11 pm
=== Facebook is not a shill for ===

The Russians?

Is that all ya got, “Anon”?

Someone so sad must be having a bad day, let me guess: you Heart IrvinBourne?

Comment by Juvenal Thursday, Jun 9, 22 @ 1:26 pm
in the theme of securities markets, Meta Platforms has replaced Facebook, even got a new ticker and everything. I’m 20 years into order management at a Broker Dealer. We worry about much more than PFOF. We route based on execution quality. The more market makers there are, the tighter the spreads are, the better liquidity there is, and more price improvements all around for clients. Not many people know how the sausage is made and it can be quite complexing. PFOR isn’t the enemy. Enjoy your free commission trades too.

Comment by Jose Abreu's Next Homer Thursday, Jun 9, 22 @ 1:30 pm
Stop pretending like Griffin is the only person and citadel the only company to do stuff like this. This is stuff just about every major investment firm or fund uses on Wall Street. With democrats here losing their minds over every action Griffin does somehow makes the GOP’s Madigan obsession look reasonable by comparison.

Griffin is only in it for himself but so is every other billionaire that gives to both parties, Pritzker included.

Comment by Politics Commenter Thursday, Jun 9, 22 @ 2:21 pm
===With democrats here===

So the GOP is pro-billionaire?

Are you feeling… sorry… for the richest guy in Illinois?

lol

Comment by Oswego Willy Thursday, Jun 9, 22 @ 2:31 pm
“So the GOP is pro-billionaire?

Considering who our incumbent governor is and the percentage that billionaires give to candidates (much more democratic than GOP) I find it hard to believe the democrats are anti billionaire by any stretch here. Besides the GOP doesn’t exactly deny it seeing as their frontrunner (as of present) is funded by one.

“Are you feeling… sorry… for the richest guy in Illinois?”

I really don’t care what happens to him one way or another, his actions do not personally impact me. I certainly don’t wish ill will on him as that doesn’t do a whole lot of good for anyone, nor do I fawn or the failures or success of a man I will never meet or interact with.

Comment by Politics Commenter Thursday, Jun 9, 22 @ 2:48 pm
=I really don’t care what happens to him one way or another, his actions do not personally impact me.=

Did you sleep through the Rauner years? And unless you’re very wealthy in your own right, Ken Griffin’s actions kept you from having your state income taxes lowered.

Comment by Pundent Thursday, Jun 9, 22 @ 3:09 pm
===Considering who our incumbent governor is and the percentage that billionaires give to candidates (much more democratic than GOP)===

Cite please.

Comment by Oswego Willy Thursday, Jun 9, 22 @ 3:17 pm
- Stop pretending like Griffin is the only person and citadel the only company to do stuff like this. -

The story clearly says this, and no one is pretending. Citadel happened to have been involved in the highly visible GameStop fiasco, and clearly used their leverage to intervene against the Robinhood investors.

So please, cry me a big river that Citadel was mentioned, I’m sure Ken is going to lose a lot of sleep over it.

Comment by Excitable Boy Thursday, Jun 9, 22 @ 4:40 pm
==Stop pretending like Griffin is the only person and citadel the only company to do stuff like this.==

There were a whole bunch of robber barons too.

Comment by Big Dipper Thursday, Jun 9, 22 @ 6:11 pm
Do a search for Ken Griffin on Twitter and you will see that he is very popular in the retail trade world. A lot of people comparing him to Bernie.

Comment by Real Thursday, Jun 9, 22 @ 6:51 pm