Citadel, Others Sue Options Exchanges Over Fees

May 23 2013 | 12:32pm ET

Citadel Investment Group's investment-banking arm and three other firms have sued a quintet of major U.S. options exchanges, alleging that they were overcharged.

The lawsuit, filed in Chicago state court yesterday, alleges that the Chicago Board Options Exchange, International Securities Exchange, NYSE Arca, NYSE Amex and Philadelphia Stock Exchanges all systematically overcharged or wrongly assessed fees on options trades for seven years. Citadel Securities and its co-plaintiffs say they were overcharged on millions of orders over a seven-year period.

Among the issues are how the exchanges assess market-maker-to-market-maker orders with payment for order flow fees, the firms allege, and the exchanges' refusal to do anything about it. One of the firms paid nearly $6.4 million on mis-marked orders over the period, according to the lawsuit.

"The dispute arises from the exchanges' assertion that they are entitled to mischarge their members without taking any responsibility for it and without any liability under the law," the suit alleges. The firms are seeking "recovery or restitution of all PFOF fees that were inappropriately charged by the exchanges."

Citadel is joined in the lawsuit by Group One Trading, Ronin Capital and Susquehanna Investment Group.


In Depth

Q&A: Rotation Capital's Rothfleisch On SPAC 2.0

Aug 11 2017 | 7:43pm ET

Corporate actions have long been a staple of event-driven investors, but activity...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Star Mountain: Private Lending in the Lower Middle-Market

Aug 14 2017 | 4:45pm ET

Private credit has become one of the most popular alternative asset classes in recent...

 

From the current issue of