Citadel Securities LLC, the electronic market-making firm founded by billionaire Ken Griffin, has been named in a wide range of court cases and regulatory actions in recent years. The Citadel lawsuit history includes two active stock-price manipulation class actions, a successful challenge to how the Securities and Exchange Commission funds its market-surveillance system, a dismissed meme-stock antitrust suit tied to the January 2021 GameStop episode, a failed bid to block a rival exchange’s order type, and settlements with the SEC and FINRA over Regulation SHO and audit-trail reporting failures. Founder Ken Griffin has also pursued his own litigation against the IRS over a leak of his tax records.
Spoofing Class Actions
Genius Group (2025)
On November 14, 2025, Grant & Eisenhofer filed a class action in the U.S. District Court for the Southern District of New York on behalf of Genius Group Limited and investors who sold Genius Group stock between April 12, 2022, and May 30, 2025. The case, Genius Group Limited v. Citadel Securities LLC et al. (No. 1:25-cv-09546), names Citadel Securities and Virtu Americas LLC as defendants and was assigned to Judge Valerie E. Caproni.1Law360. Genius Group Limited v. Citadel Securities LLC et al
The complaint alleges the two firms ran a “spoofing” campaign to artificially deflate Genius Group’s stock price. According to the filing, the defendants placed at least 1,395,792 “Baiting Orders” totaling more than 139 million shares and then canceled them before execution, on 758 of the 760 trading days in the class period. The complaint also alleges naked short selling in violation of Regulation SHO, and it says the defendants together executed between 65% and 85% of all over-the-counter trading in Genius securities during that time.2SEC. Genius Group Limited Form 6-K
The suit asserts violations of Sections 9(a) and 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. It describes a strategy the plaintiffs call the “Three Tick Boogie,” which they allege was used to benefit existing short positions and to profit from internalizing customer order flow.2SEC. Genius Group Limited Form 6-K The deadline to move for appointment as lead plaintiff was January 16, 2026. No further public rulings had been reported as of mid-2026.3BusinessWire. Grant and Eisenhofer Files Class Action Lawsuit Against Citadel Securities LLC and Virtu Americas LLC
Northwest Biotherapeutics (2022)
The Genius Group case is not the first spoofing action against Citadel Securities. In December 2022, clinical-stage biotechnology company Northwest Biotherapeutics sued Citadel Securities, Susquehanna International Group, Virtu, and five other market makers in the Southern District of New York. The case, Northwest Biotherapeutics, Inc. v. Canaccord Genuity LLC et al. (No. 1:2022cv10185), alleges the defendants placed tens of millions of fake orders between December 2017 and August 2022 and canceled them to buy shares at artificially depressed prices.4Cohen Milstein. US Cancer Drug Company Accuses Market Makers of Stock Spoofing
The complaint highlights a May 2022 episode in which Northwest Biotherapeutics released positive clinical trial data for its DCVax-L drug and the share price nonetheless dropped from $1.73 to as low as $0.39.4Cohen Milstein. US Cancer Drug Company Accuses Market Makers of Stock Spoofing The case is in discovery. In February 2026, Magistrate Judge Gary Stein denied the defendants’ motion to compel additional production, finding that Northwest Biotherapeutics had adequately identified its “Baiting Orders” and shared its methodology.5CaseMine. Northwest Biotherapeutics Inc. v. Canaccord Genuity LLC et al
The Consolidated Audit Trail Funding Fight
Citadel Securities’ most consequential recent litigation challenges how the SEC pays for the Consolidated Audit Trail, a surveillance system tracking trading activity across U.S. securities markets. The CAT has cost more than $1 billion to build and roughly $200 million a year to operate.6NCLA Legal. 11th Circuit Rules Against SEC’s CAT
The 2023 Funding Order Struck Down
Citadel Securities and the American Securities Association petitioned the Eleventh Circuit to review the SEC’s 2023 order establishing the CAT’s funding mechanism. They argued the order let self-regulatory organizations such as FINRA, the NYSE, and CME pass 100% of their CAT costs to broker-dealers even though the SROs themselves govern the CAT and set its budget. They also argued the SEC relied on an outdated 2016 economic analysis: building the CAT ended up costing about eight times the original high-end estimate, and annual operating expenses came in nearly four to five times higher than projected.7U.S. Court of Appeals for the Eleventh Circuit. American Securities Association v. SEC, No. 23-13396
On July 25, 2025, a unanimous three-judge panel agreed. Judge Andrew Brasher wrote that the SEC had created a “classic free-rider problem” by letting SROs impose unchecked costs on broker-dealers and had failed to explain why it departed from its earlier requirement that costs be shared. The court vacated the funding order and remanded the matter to the SEC, staying the ruling for sixty days.6NCLA Legal. 11th Circuit Rules Against SEC’s CAT7U.S. Court of Appeals for the Eleventh Circuit. American Securities Association v. SEC, No. 23-13396
The Replacement Model and a New Petition
In March 2026, the SEC approved a replacement called the “Executed Share Model,” which splits each transaction’s CAT fee equally among the buyer, the seller, and the market regulator, and explicitly prohibits SROs from passing their share directly to broker-dealers. The agency set a two-year sunset of March 31, 2028, for fee collection under the new model while it conducts a broader review.8SEC. Order Approving Amendment to CAT NMS Plan, Release No. 34-105003
Citadel Securities and the ASA had urged the SEC not to approve any new funding model before completing that review, and filed a fresh petition for review in the Eleventh Circuit challenging the replacement order.9American Securities Association. ASA Citadel Securities File Lawsuit Challenging SEC’s Consolidated Audit Trail Funding Order In May 2026, the Securities Industry and Financial Markets Association filed an amicus brief supporting an injunction to stop SROs from collecting CAT fees while the litigation proceeds.10SIFMA. ASA and Citadel Securities v. SEC
Meme-Stock Antitrust Litigation
When Robinhood restricted purchases of GameStop, AMC Entertainment, and other meme stocks in January 2021, retail investors sued, alleging Robinhood had conspired with Citadel Securities, a major source of Robinhood revenue through payment for order flow, to halt trading and protect Citadel’s short positions.
A federal judge dismissed the case, finding insufficient evidence for the collusion theory.11Wall Street Journal. Judge Dismisses Meme Stock Lawsuit Against Robinhood and Citadel Securities The plaintiffs appealed, recasting their claims as antitrust violations in a “no-fee brokerage trading app market” and a “payment for order flow market.” On July 11, 2024, the Eleventh Circuit affirmed the dismissal, holding that the drop in meme-stock prices did not amount to anticompetitive harm in either market as defined.12Inside Class Actions. Game Stopped: Eleventh Circuit Affirms Dismissal of Meme Stock Antitrust Lawsuit
IEX D-Limit Order Challenge
In 2020, Citadel Securities sued the SEC in the D.C. Circuit to block approval of IEX Group’s “D-Limit” order type, a discretionary limit order that imposes an approximately 350-microsecond delay designed to protect liquidity providers from high-frequency latency arbitrage. Citadel argued the SEC had violated the Administrative Procedure Act by ignoring data showing the order type could harm retail investors, calling it an interference with the “natural course of the market.”13Bloomberg Law. Citadel Securities Brawl With SEC Over IEX Order Goes to Court
On July 29, 2022, the D.C. Circuit denied the petition, ruling the SEC’s approval was based on substantial evidence, was not arbitrary or capricious, and had been properly explained.14Traders Magazine. IEX Welcomes Ruling on SEC D-Limit Order Approval
SEC and FINRA Enforcement Actions
The firm’s FINRA BrokerCheck record lists 75 regulatory events.15FINRA. Citadel Securities LLC BrokerCheck Report Three recent ones stand out.
2023 SEC Settlement on Regulation SHO
On September 22, 2023, the SEC announced Citadel Securities had agreed to pay a $7 million penalty to settle charges that it mismarked millions of sale orders between September 2015 and September 2020. A coding error in the firm’s automated trading system caused certain short sales to be labeled as long sales and vice versa, violating Rule 200(g) of Regulation SHO. The firm consented to a cease-and-desist order, was censured, and agreed to certify that the coding error had been fixed. It settled without admitting or denying the findings.16SEC. SEC Charges Citadel Securities for Reg SHO Violations A company spokesperson said the error affected a “de minimis percentage” of order markings and had “no impact on the quality of our client execution.”17CNBC. SEC Slaps Citadel With $7 Million Fine to Settle Short Selling Charges
2024 FINRA Action on CAT Reporting
In October 2024, FINRA finalized an action against Citadel Securities for failing to timely and accurately report data for “tens of billions of equity and option order events” to the Consolidated Audit Trail over more than four and a half years. The firm identified 33 distinct types of reporting errors, some persisting nearly two years, followed by four additional issues that lasted more than two and a half additional years. Citadel Securities consented to the findings without admitting or denying them, attributing the problems to coding issues, third-party data, and differing interpretations of certain reporting rules.15FINRA. Citadel Securities LLC BrokerCheck Report
2020 FINRA Fine
In July 2020, FINRA fined Citadel Securities $700,000 for violations on its over-the-counter equity trading desk, including trading ahead of customer orders.18Law360. FINRA Fines Citadel Securities $700K for Trading Violations
GSA Capital Trade Secrets Case
Citadel Securities has also been the plaintiff. In January 2020, it sued London-based hedge fund GSA Capital Partners, alleging GSA had misappropriated a closely guarded high-frequency trading algorithm that Citadel had spent roughly $100 million to develop. The dispute centered on Vedat Cologlu, a former quantitative researcher at Citadel Securities, who allegedly shared proprietary information about the strategy during GSA’s recruitment process. Citadel sought at least $40 million in damages. The parties reached a confidential settlement in June 2021.19Bloomberg. Citadel Securities Settles With Hedge Fund Over Secret Algorithm
Ken Griffin’s IRS Data Breach Lawsuit
Separate from the firm, Ken Griffin sued the Internal Revenue Service after his confidential tax return information was stolen and published by ProPublica in March 2022. The theft was traced to Charles Littlejohn, an IRS contractor who bypassed security systems to steal tax data belonging to Griffin and other high-profile taxpayers, including Donald Trump, Elon Musk, and Jeff Bezos. Littlejohn provided Trump’s records to the New York Times and the billionaire data to ProPublica. He pleaded guilty in October 2023 and was sentenced to five years in prison in January 2024.20Fortune. Ken Griffin Apology IRS Tax Returns Leaked
Griffin sued in the Southern District of Florida under Section 7431 of the tax code and the Privacy Act. In April 2024, the court dismissed the Privacy Act claim because Griffin had not alleged financial harm. In June 2024, Griffin and the IRS settled the remaining claims, with the IRS publicly apologizing to Griffin and thousands of other affected taxpayers and stating it had made “substantial investments” to address security weaknesses identified in prior audits.21Bloomberg Tax. IRS Apologizes to Ken Griffin to Settle Tax Data Breach Case22Tax Notes. Griffin Case Settled but Privacy Act and Section 7431 Relationship Isn’t