I don’t think people really understand how Citadel’s internal structure works. It’s not just one mustache twirling villain, deciding what to do.
The market making unit is in a totally different part of the org chart, with its own PnL lines, than the hedge fund. In fact Citadel Securities is a separate company than Citadel Investments.
But most importantly there’s a legally mandated Chinese firewall between the two. Employees on one side are not allowed to discuss operations with employees on the other. This is enforced to the extent, that an employees access card won’t let them enter the other side of the division.
Citadel makes a shit ton of money as it is. Nobody there is going to risk major jail time with an easy to unravel scheme involving dozens of co-conspirators, just to make a few extra bucks on a tiny short position.
I don't know for sure but I don't think there needs to be a chinese firewall between the two like at banks. Banks investment banking and advisory divsiions have access to insider information by the nature of their work, which is why the chinese firewall exists between them and the sales and trading desk. Citadel is a hedge fund, however that uses only public information (presumptively, as otherwise would be illegal) so i don't think there's a reason why they would need to be firewalled off. Also Citadel does use Citadel Securities for execution.
Additionally, they're both owned (mostly) by Ken, who is know for being a bit "detailed" (to put it nicely) when it comes to his businesses. He almost certainly has live second by second pnl updates for all parts of all of his business, he almost certainly was the one who made the decision to invest 1.4+ bn into Melvin, and he almost certainly knows that retail flow (esp robhinood) is a huge part of citadel securities business.
Honestly I think reddit has some grounds for a case here, but IANAL.
This is weasel crap, and pretending that separation is meaningful is one of the reasons people hate legalese smoke and mirrors. All it takes is someone near the top of the org to send some messages, and you don't have to be in the same room to do it. The financial world pretends this crap works because otherwise they'd be rightfully pilloried for exactly the kind of shit that is happening right now.
The market making unit is in a totally different part of the org chart, with its own PnL lines, than the hedge fund. In fact Citadel Securities is a separate company than Citadel Investments.
But most importantly there’s a legally mandated Chinese firewall between the two. Employees on one side are not allowed to discuss operations with employees on the other. This is enforced to the extent, that an employees access card won’t let them enter the other side of the division.
Citadel makes a shit ton of money as it is. Nobody there is going to risk major jail time with an easy to unravel scheme involving dozens of co-conspirators, just to make a few extra bucks on a tiny short position.