Citadel Securities seeks to nix “short squeeze” conspiracy allegations
As the large-scale lawsuit brought by traders against dozens of brokers, clearing houses, and funds continues at the Florida Southern District Court, one of the defendants in the so-called antitrust tranche of the lawsuit – Citadel Securities, has responded to the allegations.
On August 30, 2021, Citadel Securities filed a motion to dismiss the complaint against it. The document, seen by FX News Group, names one basic reason for which, according to Citadel, the traders’ complaint has to be nixed – failure to state a claim.
This putative class action arises from historically unprecedented volatility in the securities markets during the week of January 25, 2021. Spurred by social media and online forums, retail investors sent stock prices and trading volumes for certain stocks soaring, driving the price of GameStop, Inc. (“GME”) up 134% on January 27, 2021 alone. Other symbols increased between 200% and 300% that same day.
A frenzied interest in GME, AMC Entertainment Holdings, Inc. (“AMC”) and other “meme” stocks, which Plaintiffs label the “Relevant Securities,” pushed trading volatility to record levels.
Citadel explains that the unprecedented market volatility impacted brokerages in different ways and led market participants to take different actions in an effort to address the impact of the volatility. Clearing agencies (not named in this suit) imposed extraordinary capital requirements on brokerages, including defendants in this action, consistent with SEC regulations and designed to mitigate risk in volatile markets, according to Citadel. These sudden requests effectively required those brokerages to post massive amounts of capital (including more than $3 billion for one defendant) with only a few hours’ notice.
Citadel Securities claims it continued to facilitate the trading activity from its retail brokerage clients during the relevant time period without interruption or restriction every minute of January 28, 2021.
According to Citadel, the antitrust claim is predicated on the speculative contention that the “meme” stock prices would have been even higher but for the alleged conduct, combined with the absurd contention that every member of the putative class was harmed because they would all somehow have timed the market perfectly absent the restrictions and sold their shares of the “meme” stocks at a profit. But the claim fails from its inception and in fact has nothing to do with competition at all, Citadel argues.
Citadel says:
“Lacking evidence of an actual agreement—and even admitting that they do not know what Citadel Securities’ positions were in the Relevant Securities—Plaintiffs continue to insist that disparate trading restrictions, as implemented by Defendants, evidence an unlawful conspiracy. It is a conspiracy born of speculation and contradicted by logic”.
According to Plaintiffs, the real reason the Introducing Brokers introduced the disparate restrictions was because Citadel Securities—alleged to have a commercial relationship with some, but not all, of the defendants— sought to depress the prices of the Relevant Securities to protect Citadel Securities’ alleged short position.
According to Citadel, the traders offer zero direct evidence that:
- (1) Citadel Securities actually held a short position in the Relevant Securities; or
- (2) that any unlawful agreement existed between any two Defendants, never mind among all Defendants.
The alleged conspiracy is also implausible, Citadel insists. As Plaintiffs acknowledge, Citadel Securities’ business is predicated on facilitating trading activity. There is no allegation that Citadel Securities ever refused to facilitate trades in any of the Relevant Securities. Moreover, even if Citadel Securities did stand to benefit from a lower price in the Relevant Securities, none of the brokers did; they are not alleged to have bought or sold these securities for their own account.
Also, Citadel notes that restricting trading causes the brokers to lose revenue, and they are agnostic to the price of the Relevant Securities (no different from the thousands of other publicly traded securities). And they are not alleged to have received any financial benefit from Citadel Securities in return for joining the alleged conspiracy.
Finally, according to Citadel, this case is no more than a “securities complaint in antitrust clothing,” and therefore is implicitly precluded by the federal securities laws. Congress and the expert regulatory agencies have created a complex system of statutes and regulations that govern the functioning of the securities markets, including the conduct at issue here. Thus, even if Plaintiffs had adequately pleaded an agreement, they still could not pursue antitrust claims as a matter of law.
Citadel concludes that this case must be dismissed with prejudice.
August 31, 2021 @ 4:12 pm
This is false, look into the actual amount thee companies were told to put up, it wasn’t $3B as it was dwindled down to $700MM. Massive difference there and it was Citadels doing.
August 31, 2021 @ 4:18 pm
Hi Tristan! Thank you for the comment but when you say “this is false”, please, specify what exactly is “This”. The article is based on Court documents and, hence, these are allegations made by Citadel and/or the traders. If you are a party to this case, you can voice your concerns with the Court.
August 31, 2021 @ 5:35 pm
Maria,
Look at what he wrote. He clearly states what “This” is. In case you cannot comprehend, “This” is the amount companies were told to put up. He says it was $700 M, not $3 B. Also, this article is based on court documents filed by Citadel. If you think they are going to ask the court to dismiss the case, while agreeing with the plaintiff’s numbers, maybe doing stories on court cases is not a good idea. This whole article reads like a one sided defense of Citadel, with no opposing view offered. This is less of a new story than an opinion piece.
August 31, 2021 @ 5:59 pm
Why do you people get so angry when somebody goes counter to your opinion. FFS, calm down already. If you are on the right side of history in this noble crusade, why do you have to be such small d*cks about it?
August 31, 2021 @ 6:29 pm
I have no dog in this fight. But this is a matter of accurate reporting and this article is a completely one sided opinion piece. When called out on it, the “d*ck” response is even worse.
“The article is based on Court documents and, hence, these are allegations made by Citadel and/or the traders. If you are a party to this case, you can voice your concerns with the Court.”
Let’s break this down. The article is based on Court Documents. Yes. Citadel’s court filing. NOT the complete picture. It’s Citadel, the DEFENDANT’S info. Where is the opposing view or allegations? No where to be seen. Why not list the plaintiff’s allegations and motions they have filed? Why not go over the original complaint? None of that info is included to paint a full picture.
And then there is the response of if you are a part to this case, you can voice your concerns with the Court. Basically that’s saying to the OP go talk to the court if you don’t like our reporting because your opposite opinion isn’t wanted here. If you want to write an opinion piece about the situation, feel free. But to write this as news, and then be defensive enough to say “go tell it to the court” when someone opposes your viewpoint is being a “d*ck” as you put it.
August 31, 2021 @ 7:31 pm
Thank you, Y2J!
September 1, 2021 @ 4:29 pm
Maria you shouldn’t write about something you know nothing about.
August 31, 2021 @ 7:36 pm
Hi Cory!
I appreciate your opinion. It will be taken into account. Regarding this particular article, yes, it does reflect Citadel’s point of view. Because the article is about a document that the defendants, including Citadel, filed. But there are other articles on this topic that cover the traders’ claims. The fact is that this article does not give the full picture. Its purpose was to present the defendants’ view. I initially posted articles that covered the complaint and now there will be articles that cover the response to the complaint. That’s all. Be safe 🙂
August 31, 2021 @ 10:26 pm
Hello Maria. Thank you for your response. I did some digging and could not find an article you write going over the plaintiff’s side of the case. I did find an article going over Robin Hood stating they could limit trades, and this article on Citadel. If you do have articles covering the other side, please post some links. I would suggest doing an article covering both sides as well.
Also, to not have your article confused with an opinion piece, perhaps in the future do not use terms like “so-called”. When you say “so-called antitrust tranche of the lawsuit” that is a clear indication of opinion.
August 31, 2021 @ 10:50 pm
Hi again Cory!
The search engines are not always perfect – I am sorry you did not find the articles you were looking for. May I suggest using “short squeeze” or “conspiracy” or even “clearinghouses”?
I am thankful for the recommendations. I cannot promise a “full picture” article, as this case is just starting to unfold, so I am taking it step by step. This matter is complex and the best I could expect is simply scratching the surface. I know it’s annoying sometimes but first I cover the complaint, then the responses (and the motions to dismiss), then the replies to the motions to dismiss, etc. In mid- to late September (unless there is rescheduling of the deadlines) the traders will reply to Citadel, Robinhood, etc. Then, I hope to be able to cover the traders’ reply, and so on.
Be safe.
September 1, 2021 @ 1:35 am
This article reads one-sided because it is a report about the f#cking motion motion dismiss. The author is literally telling you what Citadel is arguing, not taking a side. (This comment was moderated for explicit language – Ed.)
September 1, 2021 @ 7:24 am
Thank you, “Common sense”!
September 1, 2021 @ 6:20 pm
So all Citadels perspective and nothing from those who are bring the case? Sounds like someone will be receiving a nice package. This is bad writing, there are two sides yet writer decides to report one. The powerful one I might add.
September 1, 2021 @ 10:19 am
https://www.dailymail.co.uk/news/article-9209347/Robinhood-CEO-reveals-NSCC-demanded-3BILLION-security-company-stopped-GameStop-trades.html
Check yourself before you wreck yourself
September 1, 2021 @ 2:57 pm
Maria,
If you are covering this story as motions, filings, etc develop, please post a link to your initial article covering the plaintiff’s claims.
Common sense dictates that if “first (you) cover the complaint, then the responses (and the motions to dismiss), then the replies to the motions to dismiss, etc.” then you should have access to that article quickly so it can be posted for everyone to see.
September 1, 2021 @ 3:20 am
Doesnt matter what their side is .. Hedgies r fukd… Amd if they dismiss this case without due dilligence in investigation then WE FUKING RIOT …OPPS I MEAN PEACEFULLY PROTEST IN THE STREETS
September 1, 2021 @ 10:16 am
We are writing history every day, in time all wrong doings will come to light. As for me I like the stonks and will continue to buy at these price levels. See you on the flip side.✌
Anonymous
August 31, 2021 @ 5:29 pm
0.5
Anonymous
August 31, 2021 @ 6:46 pm
1
August 31, 2021 @ 7:19 pm
I do have a dog fight in this and I’ve been following this story in detail for a long time. What Triston is pointing out is the facetious statement in Citatel’s filing: (including more than $3 billion for one defendant). when in fact it was negotiated down to under $1 billion.
Citadel completely leaves out what could have transpired during that negotiation between Vlad & RobinHood versus DTSS? What on earth could Vlad say to convince DTSS to bring down the collateral money request down so much? Seems reasonable and highly likely Vlad told DTSS he would limit his customers from buying. By the way, one of the member’s of the DTSS i believe is from Citadel.
Anonymous
August 31, 2021 @ 8:35 pm
4.5
August 31, 2021 @ 10:10 pm
Anothe paid shill.
Why are you so concerned all of a sudden for retail investors’ well being?
Anonymous
August 31, 2021 @ 11:05 pm
5
August 31, 2021 @ 11:38 pm
” they do not know what Citadel Securities’ positions were”
This should be easy enough to rectify then, show what their positions were. If one suspects a politician of manipulation to improve is stock you confirm or disconfirm by having them reveal their stock holdings. Surely an analogous move can be made for Citadel and their shorts?
August 31, 2021 @ 11:45 pm
Are they really trying to contend that prices would not have continued to follow the clearly upward trend of the day? And that people wouldn’t have sold when it was up, that this required “perfect” timing, when really it’s just the basic rule of “buy low sell high”? And do they forget the real time updating apps give to people now? Timing is a lot easier to achieve these days. How low is their impression of us unwashed masses?
“According to Citadel, the antitrust claim is predicated on the speculative contention that the “meme” stock prices would have been even higher but for the alleged conduct, combined with the absurd contention that every member of the putative class was harmed because they would all somehow have timed the market perfectly absent the restrictions and sold their shares of the “meme” stocks at a profit.”
August 31, 2021 @ 11:55 pm
One troubling trend throughout this piece is that the phrasing (and perhaps punctuation?) makes it hard to discern the claims of Citadel from the claims of the author. Moving a “Citadel said” to the end of a statement, rather than before it, can give the reader the impression that the author (who should be regarded as conferring unbiased authority) is stating these things, not Citadel. The reader is left assuming this is the authoritative opinion of the reporter until the very end.
“the absurd contention that… But the claim fails from its inception and in fact has nothing to do with competition at all, Citadel argues.”
September 1, 2021 @ 2:50 pm
Exactly my point too she does not seem to understand. This is an opinion piece with cherry picked info from the Citadel filing trying to portray it as a news article.
Anonymous
September 1, 2021 @ 1:20 am
2
September 1, 2021 @ 1:32 am
Maria, it looks like the Reddit AMC/GME Cults found your article. Best to ignore them since engaging just asks for further name calling and conspiracy theories. Thanks for detailing the info for us.
September 1, 2021 @ 2:00 am
How are you posting from the future? What are tomorrow’s lottery numbers?
September 1, 2021 @ 2:39 am
He predicted you
September 1, 2021 @ 2:39 am
The small d”cks statement was the only petty name calling i found. Was that from a reddit conspiracy nut. (This comment was moderated for explicit language – Ed.)
September 1, 2021 @ 2:12 pm
Maria
One sided story for Citadel.
It’s not an article, it’s Citadel’s advertisements for this allegation.
13 years of Journalism?
Shame on you Maria.
You did your job for Citadel by posting this advertisement.
You don’t have to justify yourself by giving awkward answers to each bad posts.
We already know what kind of person you are. Poor Maria.
September 1, 2021 @ 7:24 am
Thanks, Rocko 🙂
October 18, 2021 @ 2:19 pm
Agreed. The cultists are the problem. Ignore them. Let them lose their shirts. it’s their problem.
You are simply another distraction to vent their cult like behaviour upon.
September 1, 2021 @ 6:53 pm
Looks like we have a citadel employee here. Everyone point and laugh
September 1, 2021 @ 2:46 am
lol shillish af
September 1, 2021 @ 3:59 am
no u
September 1, 2021 @ 4:44 am
Let’s see what’s left of citadel when the dust settles. If they were the market maker and this responsible for insuring the solvency of those who naked shorted the stock, whether that is Citadel securities or not, the implication is that if an entity is on one side of the trade and exposed to potentially infinite losses, then the other side can have potentially infinite gains and sap everything from every institution who participated in the facilitation of market manipulation…as one of those investors, my claim is for literally every dollar they have, after they sell the clothes off their backs.
September 1, 2021 @ 5:56 am
Citadel is fraudulently performing its duty as a market maker by routing 60% (and often more) of retail orders through unlit channels. They have also used futures/swaps to hide Failures To Deliver, the same swaps responsible for the 2008 financial crisis.
This is totally unacceptable for a designated MM, and I recommend taking care when defending them, your future reputation will be defined by the winners of the looming market correction.
September 1, 2021 @ 2:27 pm
Guys, why won’t you believe us – we totally COVERED our positions in January. What? Closed? No we haven’t closed anything, we just keep covering the FTDs with deep ITM puts and married calls to reduce the SI% haha silly, no we wouldn’t ever abuse out position as market maker by nakedly shorting it through the hedge fund we also run in the hope that gamestop would go bankrupt haha 1.8bn shares in the wild, don’t be silly…… its far worse than that
September 1, 2021 @ 4:16 pm
This article is FUD and lacks any real facts or evidence. This author should feel shame for the garbage she produced.
September 2, 2021 @ 5:51 am
If this is the real D.Lauer, first off, thank you. I wouldn’t call this FUD though. This does not strike fear, it does not cause uncertainty, or raise doubt. To me, articles like this, that only have one side of the story, only confirm the actual knowledge you helped us gather. When you only tell one side of a story, it’s because you are choosing to do so. “Journslists” like this, shouldn’t have a job.
September 1, 2021 @ 9:29 pm
this reporter: “are you guilty?”
ken griffin: “of course not! You don’t know!”
reporter: “there you have in folks! innocent man!”
reporter: *payment from ken griffin recieved*
Anonymous
September 2, 2021 @ 12:55 am
1.5
Anonymous
September 2, 2021 @ 3:59 am
3.5
September 2, 2021 @ 7:47 am
Absolutely loving this comment section. Thank you to all but the author of the article for clarifying some of the misconceptions about this case.