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Citadel Securities used social media to return to ‘internet conspiracies and Twitter crowds’ accusing the US market maker of playing a crucial role in broker Robinhood’s decision to restrict trading in meme shares.
The move is a clear change in approach for the Chicago group, which has historically refrained from responding to often weak theories about its impact on platforms like Twitter.
But a class action lawsuit filed by a Florida court in late September by four traders and an increasing week of popular hashtags on Twitter prompted Citadel Securities to change its mind. The application alleges that brokers, including Robinhood, had a conspiracy with the marketer to prevent investors from buying shares.
“There are those who still refuse to believe that an American ended up on the moon,” Citadel Securities said in a tweet. “The plaintiffs’ attorneys concealed the facts from the court and the public, causing conspiracy theorists to abandon unfounded theories.”
Citadel’s market marketing has long been the alleged bogeyman among a division of retailers on social media sites such as Reddit and Twitter. They believe the group is the biggest beneficiary of the transition to high-speed trade in the 2010s, and then the boom in retail during the pandemic.
Data from this week from Bloomberg showed that the company was responsible for about 45 percent of all meme shares traded privately, ahead of competitors such as Virtu Financial, GTS and Two Sigma in January. That share has since fallen back to 34 percent, only marginally ahead of Virtu.
But retailers took the episode with ‘meme stocks’ in January, when the overwhelming amount of trading in names like GameStop and AMC forced broker Robinhood to restrict trading.
Robinhood said it was forced to move due to the size of margin calls from the cleaning house, the NSCC. It had to find $ 3 billion within 3 hours – a figure negotiated to $ 700 million.
Robinhood, like other brokers, sells client trades to market makers, who in return promise to execute the trade at or at current market prices. Citadel Securities is the largest in the market, offering nearly $ 1.5 billion in improved prices last year, according to Bloomberg data. As the largest market maker, it also paid the most fees to brokers, at $ 1.1 billion.
Ken Griffin, major shareholder of Citadel, which also manages a separate hedge fund, testified to lawmakers during the ensuing hearing that Citadel Securities did not push Robinhood into the action. His Wikipedia page has been corrupted in recent days.
The latest case alleges that other executives of Citadel Securities knew in advance that Robinhood would restrict the trading of e-mail exchanges between employees of the company. The market maker calls it ‘an absurd story’.
‘It is crystal clear that Robinhood restricted trade in response to a $ 3 billion call from the NSCC. Several documents, statements and temporary communications confirm this. ”
It added that the first time he heard about Robinhood’s trade restrictions was from posting on Twitter. Robinhood CEO Griffin and Vlad Tenev have never met or spoken before.