Ken Griffin
Photographer: David Paul Morris / David Paul Morris
Photographer: David Paul Morris / David Paul Morris
The name is a key word of power on Wall Street. But, suddenly, there was also, in the information room of the White House: “Ciutadella”.
Faced with the wild stock market spectacle involving GameStop Corp., the question last week for the new press secretary was this: it would be Janet Yellen, now Secretary of the Treasury, retiring from the affair given the hundreds of thousands of dollars he had raised while talking? Citadel fees?
For people outside of financial circles, the answer – Yellen is a professional, nothing to do here – was probably less surprising than the fact that Ciutadella appeared. But in the true story of GameStop and Robinhood, Citadel, the financial empire run by billionaire Kenneth Griffin, has become a topic of fascination, speculation, and, in some corners of the Internet, grassroots conspiracy theories.
No one in a position of authority has officially charged Citadel with crimes. But from Washington in Silicon Valley to Wall Street to cyberspace, the gigantic financial company is at the center of many of the questions that arise, including the big one: what’s happening on Earth?
Griffin, 52, began trading in his Harvard dorm room and, three decades later, runs one of the largest hedge funds and one of the world’s leading market makers. On the verge of extinction during the 2008 financial crisis, the billionaire has now become the ultimate example of a Wall Street archetype with money that is easy to fight.
Introduce the angry retail crowd with their “to the moon” bets on GameStop, AMC Entertainment and other stocks. When Robinhood put a brake on the negotiation of many of these companies last week, Redditors and politicians cried out for brutality. The accusatory fingers pointed at Griffin, a Republican megadonator layout to end the rebellion of individual investors, even when Citadel and the online broker denied the billionaire’s involvement in the decision.
All the roads in last week’s saga seemed to pass through Citadel. Market maker Citadel Securities is one of Robinhood’s most important sources of revenue, as it pays the trade-free application to manage its orders and fills them more than any other company.
Meanwhile, the hedge fund, a separate entity from the market maker, along with Griffin and its partners invested $ 2 billion in Melvin Capital, which lost 53% in January after being bloodied by a small squeeze of actions, including GameStop.
“Definitely false”
No one could say why they were confident of Griffin’s hand in Robinhood’s decisions and gave a brief answer to the most likely explanation: the broker’s financial fragility. The deposits that Robinhood had to make for shares multiplied by ten during the week.
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California Democrat Congressman Rohit Khanna asked Robinhood CEO Vladimir Tenev to answer questions about whether he was discussing the company’s actions with someone at Citadel and whether clearing houses were restricting trade in coordination with funds. coverage.
“There are people who say that the market leaders we target or other market participants have forced us to do this, and I just want to go out and say this is categorically false,” Tenev said in an interview with Bloomberg TV. He later reiterated that no market maker or other players had even asked him to restrict the purchase to GameStop or a handful of other high-volume names.
Texas Attorney General Ken Paxton launched his own investigation into Citadel, Robinhood and other brokers: “The apparent coordination between hedge funds, trading platforms and web servers to close threats to their market dominance is surprisingly wrong and unprecedented. It stinks of corruption, “he said dit.
Paxton is himself being investigated for corruption in a separate case, according to the AP, for which he has denied the offense.
Citadel denies even the clue of any suspicious behavior. “Citadel Securities has not given instructions or caused any brokerage firm to stop, suspend or limit trading or refuse to do business,” the company said in a statement. For its hedge fund, “Citadel is not involved and is not responsible for any retail broker’s decision to stop trading in any way.”
Manufacturing markets
Amateur detectors found fertile ground to encourage conspiracies. They didn’t hesitate to throw Jeff Psaki, Citadel’s money manager, as proof of the dark arts at the firm. It began with claims that Psaki, a former Goldman businessman, was married to White House Press Secretary Jen Psaki. He is not: he is her second cousin and has never spoken to her, said a person who knows him. But he continued, bouncing off chat boards on Twitter and beyond.
There were questions about Yellen’s rainfall coming from Citadel: the more than $ 700,000 he got for oral commitments the firm paid over the past two years.
What is certain is that Griffin’s Citadel Securities plays a key role in trading through the stock market and has probably made a lot of money during the GameStop frenzy. The market maker’s machines are built to thrive on days of uncertainty and high volume, many of which were in January – on Wednesday alone, $ 29 billion worth of GameStop shares changed hands.
This trading craze offers millions of chances to run a trade. Companies like Citadel Securities make money with the price difference between buying (or selling) a stock and then selling it (or buying it) almost immediately. While the amount is minuscule for any individual order (fractions of a penny), it adds up quickly at extreme times.
“Citadel Securities witnessed an extraordinary level of retail trade last week,” the company said in a statement to Bloomberg. “On many occasions throughout the week, large brokerage firms relied on our capabilities to handle the flood of orders.”
“The more stocks you see, the more bread crumbs you take,” said Larry Tabb, an analyst at Bloomberg Intelligence. “Especially in highly volatile names, spreads are wide, so they are no longer necessarily breadcrumbs.”
In this scenario, Robinhood’s decision to limit purchases of certain shares “has more to do with compensation than with execution,” he added.
– With the assistance of Annie Massa