Billionaire

Ken Griffin’s

digital buying and selling company, Castle Securities, is below fireplace once more over its function within the January buying and selling frenzy in stocks of

GameStop Corp.


GME -5.74%

after new knowledge surfaced in a lawsuit.

The extraordinary remark got here because the hashtag #KenGriffinLied used to be trending on Twitter.

The furor used to be caused through inner Robinhood communications made public final week as a part of a lawsuit filed through buyers who had been suffering from the buying and selling restrictions. The go well with is looking for damages from Robinhood and quite a lot of different brokerages, in addition to Castle Securities and a few corporations that transparent inventory trades.

The communications confirmed executives from Robinhood and Castle Securities held discussions within the days prior to the Jan. 28 transfer, when each corporations had been grappling with surging buying and selling volumes in meme stocks. Whilst the communications don’t make it transparent what the companies mentioned, they point out the talks had been acrimonious. In an inner chat message dated Jan. 27, the president of Robinhood’s stockbrokerage arm,

Jim Swartwout,

stated “you wouldnt believe the convo we had with Citadel. total mess.”

Legal professionals for the plaintiffs stated in a courtroom submitting final week that the communications confirmed Castle Securities burdened Robinhood to curb small buyers’ buying and selling.

Castle Securities—which executes lots of the orders submitted through Robinhood shoppers—has denied exerting such power. In February, Mr. Griffin, the company’s founder and primary shareholder, stated in written testimony to the Area Monetary Services and products Committee that his company “had no role in Robinhood’s decision to limit trading in GameStop or any other of the ‘meme’ stocks.”

The buying and selling company reiterated its stance on Tuesday. “Conspiracy theorists and plaintiffs’ lawyers are trying to concoct an absurd story from regular-way communications among Citadel Securities and the brokers who handle orders for retail investors,” Castle Securities stated within the remark.

The company stated its discussions with brokerages throughout the GameStop frenzy had been aimed toward making sure marketplace steadiness. “Amid an unprecedented surge in retail trading engagement, our respective teams made sure that operational demands were addressed and that retail investors had access to Citadel Securities’ superior execution capabilities,” Castle Securities stated.

A spokeswoman for Robinhood denied on Tuesday that Castle Securities had burdened the brokerage to impose the buying and selling restrictions.

“These complaints attempt to create a false narrative of collusion, and we will work vigorously to continue correcting the record with the facts,” she stated. “In times of market stress, it’s normal and advisable for us to communicate even more with our market centers.”

Joseph Saveri,

a attorney for the plaintiffs, stated the communications exposed through the lawsuit spoke for themselves.

“What may seem like ‘regular’ conduct to conspirators may fall squarely within the ambit of illegal, anticompetitive conduct,” he stated. “Defendants’ actions significantly injured retail investors, and we are determined to litigate this matter effectively on their behalf and prepare the case for trial.”

Robinhood has stated that it imposed the Jan. 28 buying and selling curbs on account of a $3 billion margin name that morning from the Depository Consider & Clearing Corp., which runs the clearinghouse of U.S. inventory trades. By way of enforcing the bounds, Robinhood diminished the amount of cash it had to publish on the clearinghouse. The DTCC has corroborated Robinhood’s account.

GameStop’s inventory worth fell 44% on Jan. 28 after quite a lot of brokerages imposed the bounds, which averted many buyers from purchasing the stocks or including to their holdings. The cost of the videogame store’s inventory had rallied previous, buoyed through a vast marketing campaign on Reddit and different social-media websites during which buyers touted GameStop and a couple of different shares.

The episode has caused a number of congressional hearings and is anticipated to be the topic of a soon-to-be-released document from the Securities and Change Fee.

Digital buying and selling corporations similar to Castle Securities pay retail brokerages for the proper to execute their shoppers’ inventory and possibility orders, a tradition known as fee for order glide. SEC Chairman

Gary Gensler

has stated the company is analyzing payment for order flow as a part of a broader assessment of U.S. stock-market construction caused through the meme-stock phenomenon.

Following the GameStop buying and selling frenzy, the SEC is anticipated to take a contemporary take a look at fee for order glide, a decades-old observe that’s on the middle of ways commission-free buying and selling works. WSJ explains what it’s, and why critics say it’s unhealthy for buyers. Representation: Jacob Reynolds/WSJ

Write to Alexander Osipovich at [email protected]

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