Courtesy of Pam Martens.
Ken Griffin, Owner of Hedge Fund Citadel, Giving a Speech at the Economic Club of Chicago in May, 2013
In response to a Freedom of Information Act (FOIA) request from Wall Street On Parade seeking information on how Citadel’s dark pool, Apogee, operates, the Securities and Exchange Commission responded in a letter dated August 12, 2014 that “we have determined to withhold records responsive to your request….”
Dark pools are the unregulated stock exchanges currently under scrutiny for potentially illegal market rigging activities. We were not asking for trade secrets or results of examinations. We simply wanted basic information on how the Apogee dark pool operates in the marketplace. Mary Jo White, Chair of the SEC, has promised greater transparency by her agency, and yet, this very basic level of information was denied.
Other dark pools like Liquidnet, Credit Suisse Crossfinder, and even the mighty Goldman Sachs’ dark pool, Sigma-X, have released their Form ATS describing the operations of their dark pools. What’s so secretive about how Citadel operates that it needs the SEC to run interference for it?
Citadel demands public scrutiny because it has been fined and/or sanctioned for market misconduct 26 times according to Financial Industry Regulatory Authority (FINRA) records. To put that number in perspective, if an individual broker had 26 violations on his public record he would have a very difficult time getting hired by a reputable firm. (Bad brokers with long histories of misconduct do sometimes get hired, unfortunately, because disciplinary records are expunged from the public record as part of settlement agreements.)
On June 25, 2014, Citadel Securities LLC, the owner of Apogee, was fined a total of $800,000 by its various regulators for serious trading misconduct. Citadel paid the fines in the typical manner, without admitting or denying the charges. This is what the New York Stock Exchange said Citadel had done:
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