• February 1, 2023

The Hedge Fund Titan In The Middle Of The Reddit Investing Revolt : NPR

Financier Ken Griffin was beaten up in chat rooms like WallstreetBets. Michael Kovac / Getty Images Hide caption

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Michael Kovac / Getty Images

Financier Ken Griffin was beaten up in chat rooms like WallstreetBets.

Michael Kovac / Getty Images

The stock market madness that started with GameStop last week is subsiding. Leaves behind a lot of noise, confusion and finger pointing.

The situation has become a kind of Rorschach test for any ideology with which to see it. And in those ink blots, many people see a man emerge: Ken Griffin, founder and CEO of investment firm Citadel, LLC.

After founding Citadel in 1990, Griffin has made the company one of the largest financial players in the country, with more than $ 30 billion in capital and a hand in almost every corner of the financial system.

Citadel initially operates a hedge fund. And the online frenzy of the past two weeks has sparked the wrath of vehement online against all hedge funds, turning them into a generic enemy.

Citadel did not respond to NPR’s request for comment.

A quick look through the popular reddit forum r / wallstreetbets shows posts like this: “Know your enemy: Kenneth C. Griffin, the barbarian behind the gates of the citadel, “with dozens of replies and comments.

When Melvin Capital, one of the funds at the center of the GameStop debacle, lost around 50% of its trading stakes, Griffin’s Citadel and Billionaire Steve Cohen’s Point72 Asset Management stepped in to fund the fund with a cash infusion of $ 2.75 billion. Save dollars.

But another arm of the Citadel has also drawn a lot of attention from those who tend to see a rigged system in the recent stock market saga. It’s Citadel Securities, what is known as a market maker.

According to James Angel, associate professor of finance at Georgetown University, market makers basically act as used car dealers for the exchange. They buy stocks from willing sellers and hold them short until they can connect with a willing buyer – which makes them massive middlemen.

“They’re selling the service of convenience to investors,” says Angel. “Because when your buy order hits the market, it usually won’t come in at exactly the same moment as someone else’s sell order. So either you have to wait, spend your time and risk the market moving Trade Market Makers. “

Citadel Securities buys large quantities of mom and pop jobs from brokers like Robinhood and others, making a cent or two on every transaction.

Citadel Securities is one of the largest market makers in the global financial system. So as trading activity and volume went down to the moon Last week Citadel’s market maker arm raked cash.

Even one of the niche aspects of this saga can be turned into a story of the citadel. When Meme stock investors flocked to the silver trading this week, Redditors became a divided camp. Users have learned that Citadel does big business in silver. Allegations were made of a false flag operation; Perhaps hedge fonders were posing as redditors to run a silver rally that would actually be to their advantage.

The whole point is: wherever there has been crazy market action in the past two weeks. Ken Griffin’s company was there.

In fact, Treasury Secretary Janet Yellen has called a meeting to discuss the Meme stock’s situation. And according to Reuters, she received a special ethics waiver for this – because she received hundreds of thousands of speaking fees from Citadel.

Jack

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