Ken Griffin from citadel: Named wall street's biggest bad guy by 5,000 people

Ken Griffin, CEO of Citadel Investment Group, has long been considered controversial within the financial world and often receives criticism. While no official charges have been brought against him, his image as a criminal seems to come mostly from online forums and social media, specifically among retail investors involved in the GameStop trading saga.

Griffin has also attracted much criticism due to his political donations, being one of the largest political donors during recent U.S. elections and contributing significantly to Republican candidates. Furthermore, his activities related to opposing an increase in taxes for wealthy Illinois residents have come under scrutiny and caused considerable debate.

However, these criticisms and controversies should not translate to criminal charges or convictions; it's vitally important to differentiate between public opinion, particularly via social media outlets, and legal determinations of illegal behavior. As of yet, Ken Griffin has yet to face official criminal charges or convictions for financial crimes; we will go over any situations or accusations made against Citadel/Ken Griffin here in this article.

Citadel's Aggressive Recruitment Practices

Citadel Securities, a prominent market-making firm, has faced allegations of aggressive and hypocritical recruitment practices, with former employees accusing the firm of disproportionate aggression and hostile litigation against those who leave or threaten to leave the company. These accusations have been the subject of legal disputes and have drawn attention to the firm's approach to employee departures and competition in the financial industry.

Citadel Securities filed a suit against Leonard Lancia and Alex Casimo, alleging they illegally started raising capital for Portofino Technologies while still having access to Citadel Securities' proprietary information. According to Lancia and Casimo's response, they left due to dissatisfaction over resources allocated and priority given in business operations, as well as considering starting up another firm to engage in high-frequency cryptocurrency trading—something Citadel had publicly pledged it wouldn't enter—further accusing Citadel Securities of trying to intimidate employees into staying put.

Citadel Securities has also become embroiled in legal wrangles with former employees regarding alleged theft of trade secrets when setting up their market-making firm for cryptocurrency market trading. Citadel has sought trials to determine potential damages, while those accused have denied all allegations and voiced their intent to challenge this lawsuit.

Legal battles and allegations between Citadel Securities and former employees have shed light on the contentious nature of employee departures in financial industry competition, prompting public scrutiny as well as legal proceedings regarding recruitment practices and the handling of departing staffers at Citadel Securities. Citadel remains an influential player within financial circles despite this controversy, and its retention practices continue to be closely monitored within financial communities around the globe.

Public Dislike of Ken Griffin

Ken Griffin has played an essential part in shaping Citadel into one of the premier global market makers and alternative investment firms since it opened for business in 2002 by him and his partners. Citadel serves over 1,600 clients, such as major sovereign wealth funds and central banks, through trading, research, and technology services. 

Griffin started trading aggressively while an undergraduate at Harvard in 1986, which soon led him to found Citadel four years later. Thanks to this early success and entrepreneurial drive, Citadel Securities quickly established itself as a top global market maker, providing substantial benefits for investors worldwide.

Despite his success, Ken Griffin has faced controversies and criticism, particularly about his public statements and philanthropic activities. He has been vocal about various issues, including criticizing Chicago crime and expressing his views on the potential of Miami replacing New York City as a financial capital. Additionally, Griffin's wealth and influence have made him a subject of public interest, with Forbes estimating his fortune at $26.5 billion.

These factors have contributed to a mixed perception of Griffin, with some viewing him as a financial prodigy turned industry giant, while others have expressed dislike and criticism, as evidenced by the poll conducted by InvestorTurf. Thus, it's important to consider both aspects when evaluating his impact on the financial industry.

In your opinion, who do you believe could be considered the most significant financial criminal in history, and what are the reasons for your choice? — InvestorTurf (@InvestorTurf) November 5, 2023

Citadel's Role in the 2021 Meme Stock Rally

According to court documents, Citadel was involved with Robinhood, advising it to restrict the buy button during the 2021 meme stock rally, leading to widespread controversy and accusations of market manipulation.

While Citadel Securities and Robinhood have consistently denied any involvement in advising or limiting trading on GameStop and other "meme stocks" during the retail-driven trading frenzy in January 2021, recent court documents suggest that there were indeed communications between the two entities. These documents detail conversations within Robinhood and between Robinhood and Citadel Securities on January 27, 2021, one of the days trading on GameStop was halted by various brokerages.

The lawsuit alleges that high-level employees at Citadel Securities and Robinhood engaged in numerous communications that indicated pressure from Citadel on Robinhood. Robinhood COO Gretchen Howard told CEO Vlad Tenev in a Slack conversation that she and other Robinhood executives would soon join a call with Citadel Securities; later that same day, Jim Swartwout of Robinhood Securities tweeted, "You wouldn't believe what convo we had with Citadel, total mess." The lawsuit also alleges that a call was set up between Tenev and a redacted person at Citadel Securities later that night.

While court documents suggest that there were communications between Citadel Securities and Robinhood during the GameStop trading frenzy, the nature and impact of these communications are still under dispute.

Additionally, a U.S. federal court dismissed Robinhood's lawsuit accusing them of breaking state laws by restricting trades on meme stocks during January's rally, ruling retail investors cannot pursue negligence and breach-of-fiduciary duty claims against Robinhood as commission-free brokerages do not afford relief to unfulfilled expectations under law. Although traders were disappointed at seeing stock prices plunge after trade restrictions were placed into effect, the law cannot offer relief in every instance.

Citadel Securities and Robinhood won the dismissal of a proposed class-action lawsuit brought by retail investors who accused the firms of colluding during January’s meme-stock frenzy. U.S. District Judge Cecilia Altonaga in Miami stated that plaintiffs failed to show there was any agreement between Citadel Securities and Robinhood to act together; she granted this investor group until December 20, 2021, to file any amendment to their complaint if needed.

There have been allegations against Judge Altonaga of having an apparent conflict of interest. Reports state that Altonaga's husband, George Mencio, works at the Holland and Knight law firm, which represents one or more defendants involved in this lawsuit, leading some observers to raise suspicions of potential collusion or conflict of interest on her part.

These developments demonstrate the complexity and legal scrutiny surrounding allegations of market manipulation and trading restrictions during the 2021 meme stock rally. Legal dismissals or denials by Citadel Securities and Robinhood have only added fuel to the ongoing discussion about what happened during that eventful weekend.

Allegations of False Statements Under Oath

Citadel Securities CEO Ken Griffin has been accused of making falsified statements under oath during a GameStop hearing. Allegations indicate he made false claims regarding communication between Citadel and Robinhood during trading halts on AMC and GameStop stores during January 2021.

Griffin stated under oath that no contact existed between Robinhood and Citadel Securities with respect to trading restrictions on GameStop; however, court documents and congressional reports have revealed otherwise. Griffin claims he never spoke with Robinhood CEO Vlad Tenev about these trading restrictions were false statements; furthermore, court records from a class action lawsuit against Robinhood and Citadel Securities reveal conversations within Robinhood as well as between Robinhood and Citadel Securities during trading restrictions for GameStop on January 27, 2021, and these conversations suggest communications occurred between these entities, thus refuting Griffin's statements made under oath.

Citadel's Illegal Market Manipulation 

Citadel Securities has come under several allegations for unlawful market manipulation and other unethical behavior, some of which include:

1. Spoofing: Northwest Biotherapeutics accused Citadel Securities and other Wall Street firms of engaging in spoofing, a practice where traders place orders with the intent to manipulate stock prices.
2. Mismarking orders: The SEC fined Citadel Securities $7 million for mismarking short sale and long sale orders over five years due to a coding error in the company's automated trading system.
3. Misleading clients about pricing trades: Citadel Securities agreed to pay $22.6 million to settle charges that it made misleading statements to clients about the way it priced trades.

A former Citadel Securities engineer has come forward with allegations that the company and other high-frequency trading (HFT) firms are engaging in a number of manipulative practices that are giving them an unfair advantage in the market. These practices include:

• Using order types that are not available to retail investors. High-frequency trading (HFT) firms use order types that are unavailable to retail investors in order to execute trades faster, giving them an unfair edge over investors who cannot use these same order types. This provides HFT firms with a significant competitive edge versus retail investors, who are unable to use similar order types for trading purposes.
• Engaging in "latency arbitrage." This practice takes advantage of disparities between market data transmission times between various exchanges. High-frequency trading firms use sophisticated technology that enables them to do this successfully, giving them an advantage over market participants without this technology.
• Creating artificial liquidity. Artificial liquidity refers to creating artificial demand or supply in particular securities by placing multiple buy or sell orders for that security in an effort to make it appear that there is more interest or supply in that security than actually exists, thus making HFT firms able to execute trades at more favorable prices.

These practices may not necessarily violate the law, but they do raise concerns about fairness in the market. Retail investors tend to suffer since HFT firms often possess superior technology and resources that make getting an equal trade price difficult for retail investors.

The allegations against Citadel Securities and other HFT firms have sparked a debate about whether there need to be new regulations to level the playing field for retail investors. Some regulators are considering whether to ban HFT firms from using certain order types or engaging in latency arbitrage.

Noteworthy is how allegations and regulatory actions against Citadel Securities have contributed to creating a negative perception among certain sectors of society and investors, specifically among investment professionals, leading to calls for further investigations of their practices as well as protective measures being put in place for investors' best interests.

Citadel Securities has denied all allegations and fines levied against it and continues to operate under all relevant laws, regulations, and rules in all markets where it trades. Citadel has stated in settlement documents that their employees adhere strictly to laws, regulations, and rules in each of their trading locations.

Additional Controversies

Ken Griffin's Political Donations

Griffin has been a longtime Republican donor, giving almost $60 million to Republicans in the 2022 midterm elections. His support for Florida Governor Ron DeSantis has drawn criticism, particularly due to DeSantis' controversial policies, such as the "Don't Say Gay" law. However, Griffin has also broken with DeSantis on certain issues, opposing the law's expansion.

Citadel's Bailout of Melvin Capital

Citadel's involvement in the GameStop short squeeze event, wherein they bailed out Melvin Capital with a $2 billion capital infusion, drew attention and criticism. This event further fueled the public's negative perception of Griffin and Citadel.

Ken Griffin's Portrayal in "Dumb Money" Movie

Griffin's portrayal in the recent blockbuster film "Dumb Money," which focuses on the GameStop short squeeze, has reportedly left him unhappy. The movie highlights the controversies surrounding Citadel and Griffin's role in the 2021 meme stock rally.

SEC's Inaction on Market Manipulation Allegations

Retail investors have been frustrated by the SEC's perceived inaction on allegations of market manipulation by Citadel and other market participants. Despite the numerous controversies and fines, many feel that the SEC has not done enough to protect retail investors and ensure a fair market.

Conclusion

Ken Griffin and Citadel Securities have been embroiled in multiple controversies that have generated public anger against them, such as aggressive trading practices, regulatory fines, alleged false statements under oath, and participation in the 2021 meme stock rally.

Citadel Securities' aggressive trading practices have long been the subject of much discussion and dispute. Citadel has been accused of overly aggressive recruitment practices and dealings with employees who either leave or threaten to leave, as well as being one of the most aggressive in using rebates to secure retail orders.

Regulator fines have also played a prominent role in these disputes. The Securities and Exchange Commission (SEC) fined Citadel Securities $7 million for violating short sale order marking requirements due to incorrectly marking millions of orders over five years due to a coding error in its automated trading system.

Alleged false statements under oath have also contributed to public animus towards Citadel Securities CEO Ken Griffin, who stands accused of lying under oath about having any communication with Robinhood during trading halts on AMC and GameStop in January 2021.

Participation in the 2021 meme stock rally has also generated considerable debate. Citadel Securities and Robinhood were accused of colluding to manipulate market conditions on the day prior to trading halts, sparking widespread outrage. Citadel executed orders alongside Virtu, prompting Ken Griffin of Citadel Securities to appear before a House committee for testimony in February 2021.

These controversies, coupled with Griffin's political donations and public perception of SEC inaction, have significantly contributed to public animus against Citadel Securities and its founder.