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Superstonk DD Summary: Citadel Has No Clothes

Whale

Whale

Citadel Securities, a financial services company that manages over $384 billion in market securities, has faced criticism and regulatory citations for its trading practices. The company has received 58 regulatory citations from FINRA, REGSHO, and the SEC, including instances of “willful” naked short selling. In December 2020, Citadel Securities reported a 127.57% year-over-year increase in its short position, leading to speculation about its potential role in manipulating the markets and driving businesses into bankruptcy.
Citadel Securities has been accused of engaging in high-frequency trading, which profits from the difference between the national ask and bid prices. The company has also faced criticism for its reliance on Robinhood’s data to inform its options trading and for using its own subsidiary, Citadel Securities, to support its trading style, which has been cited for 58 regulatory events.
In addition to its controversial trading practices, Citadel Securities has also been criticized for its lack of transparency. The company only publishes a 12-page annual report, called a “statement of financial condition,” which provides limited information about its financial activities. In 2018, Citadel Securities reported holding $22 billion in securities sold but not yet purchased at fair value, a liability that represents a short position. The company increased its short position to $25.27 billion in 2019 and to $57.5 billion in 2020.
Given Citadel Securities’ history of regulatory citations and its significant short position, it is important for investors to carefully consider the potential risks and implications of investing in the company.

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