Ken Griffin
Photographer: David Paul Morris / David Paul Morris
Photographer: David Paul Morris / David Paul Morris
The name lives on for power on Wall Street. But suddenly, it was also in the White House Detail Room: “Citadel.”
With the wild stock market outlook involving GameStop Corp., the question last week for the new press secretary was: would Janet Yellen, now secretary of the Treasury, get out of it with the hundreds of thousands of dollars she collected in talking taxes from Citadel?
For people outside of financial circles, the answer – Yellen a pro, with nothing to see here – may not have been less than surprising that Citadel came up at all. But in this true-to-reality story about GameStop and Robinhood, Citadel, the financial empire run by billionaire Kenneth Griffin, has become a subject of interest, profiteering and, in some parts of the world. internet, grassland conspiracy theories.
No one in a position of authority has officially accused Citadel of being wrong. But from Washington to Silicon Valley to Wall Street to cyberpace, the big finance company is at the center of many of the questions being raised, including the big one: what on Earth just happened?
Griffin, 52, started trading out of his Harvard dorm room, and three decades later, he runs one of the largest hedge funds and one of the largest market makers in the world. -world. On the verge of extinction during the 2008 financial crisis, the billionaire has now become a true example of an archetype with money, Wall Street that is easily attacked.
Enter the angry sales phone with the “to the moon” bets on GameStop, AMC Entertainment and other stocks. When Robinhood looped the trades of many of these companies last week, Redditors and politicians shouted falsely. Fingers pointed at Griffin, a Republican mega-donor, for schemes to stop the revolt of individual investors – even as both Citadel and the online broker refused to participate with the billionaire in the decision.
It seemed like all the way in last week’s saga went through Citadel. The market maker, Citadel Securities, is one of Robinhood’s largest sources of revenue, as it pays the trading app free of charge for handling its orders and fills more of them than any other company.
Meanwhile, the hedge fund – a separate entity from the market maker – combined with Griffin and its partners a combined $ 2 billion in Melvin Capital, which lost 53% in January after losing its assets in January. be bled with a short press on sections including GameStop.
‘Falsely’
No one could say why they were unsure of Griffin ‘s hand in Robinhood’ s decisions and shunned the most likely explanation: the financial fragility of the bankruptcy. Robinhood needed the investments for 10-fold installments throughout the week.
Read more: Robinhood’s Rise meteoric Feeling Wall Street Draw Physics
Congressman Rohit Khanna, a Democrat from California, called on Robinhood Chief Vladimir Tenev to answer questions about whether he discussed the company’s actions with anyone from Citadel, and whether laundries were restricting trade in co. -order with hedge funds.
“People say we’ve been forced to do this by market makers that we go to or to other market participants, and I just want to come out and say that’s wrong. to sex, ”Tenev said in an interview with Bloomberg TV. He reiterated that market makers or other players had not even asked him to restrict purchases in GameStop or a handful of other big names.
Texas Attorney General Ken Paxton launched his own probe into Citadel, Robinhood and other brokers: “The similar coordination between hedge funds, trading platforms, and web servers is to threats to their market dominance have been surprisingly unique and wrong. It’s polluting, ”he said said.
Paxton himself is under investigation for corruption on a separate case, according to the AP, which he has denied.
Citadel denies even the notion of any suspicious behavior. “Citadel Securities has not directed or otherwise given a company to cease, suspend or suspend trading or refuse to carry on business,” the company said in a statement. For its hedge fund, “Citadel is not involved in, or responsible for, the decision of retail brokers to suspend trading in any way. ”
Market making
Non-professional sleuths find fertile ground to pursue conspiracies. They didn’t bother Jeff Psaki, Citadel’s money manager, to prove it as a dark art at the company. It began with claims that Psaki, a Goldman trader, was married to White House Press Secretary Jen Psaki. No: he’s her second cousin and has never spoken to her, said someone who knows him. But he went on, rewriting from chat boards to Twitter and beyond.
There were questions about Yellen ‘s windfall from Citadel – the more than $ 700,000 she received for speaking duties paid for by the company over the past two years.
What is certain is that Griffin plays a key role in Citadel Securities in trading across the stock market, and it seems to have made a lot of money through the GameStop frenzy. The market maker’s tools are built to thrive on uncertain and high days, and there were many of them in January: on Wednesday alone, $ 29 billion worth of GameStop shares changed hands.
Such trading mania offers millions of opportunities for execution trading. Companies like Citadel Securities make money from the price difference between buying (or selling) a stock and then almost immediately selling (or buying) it. While the amount is small for any individual order – penny fractions – it adds up quickly in real times.
“Citadel Securities saw an incredible level of retail trading last week,” the company said in a statement to Bloomberg. “On many occasions over the week, the major bankruptcy companies relied on our ability to handle orders.”
“The more sections they see, the more bread crumbs they will bring,” said Larry Tabb, an analyst at Bloomberg Intelligence. “Especially in very volatile names, the spreads are wide so they no longer need bread crumbs. ”
With that situation, Robinhood’s decision to ban the purchase of some stocks must “do more by clearing than by execution,” he said.
– Supported by Annie Massa