Citadel is once again under investigation by the NYSE for its suspicious trading activities. It seems like Citadel has been repeatedly under fire over the course of the last year, so what did Citadel do now? On March 18th during the closing hour of the trading day the Shopify stock price (SHOP) sporadically increased $100 per share, boosting it to $780 per share. There was no obvious reason behind this spontaneous jump in price and just shortly after the closing bell, the price immediately crashed back down. The NYSE management is now trying to find out what exactly happened during this time and they’ve launched an investigation.
Unfortunately for Citadel this is not the only investigation they’ve been a part of recently. The firm is owned by Ken Griffin and so far has been caught and fined at least 58 times for violations of trading activities and conduct. While the SEC and FINRA can reprimand the company with fines, it seems as though the fines may just be the cost of doing business for Citadel.
As of now Citadel Securities appears to possibly have connections to the sudden price surge with the Shopify stock. While Citadel may not have broken any rules, the NYSE wants to find out what exactly happened. The trading firm is a designated “market maker” — meaning that they are supposed to balance out the billions of high volume trades to make sure the market maintains balance and help the market avoid situations like this with sudden plummets and surges.
WHY DID SHOPIFY PRICE INCREASE?
What we know now is that on March 18th Citigroup had an order in to purchase 600,000 shares of Shopify. An amount of shares this large is known as “block trading”. These firms make frequent block trades in a way that it is not supposed to impact the market drastically for regular investors. The purpose of a block trade is for brokers to make trades without influencing the market, these trades often occur between large financial institutions, pensions and hedge funds. The first half of this trade was executed at 3PM that day, while the second half was executed in the last hour of the trading day. The executions may not have been properly balanced and Shopify shares abruptly shot up 13% in the last few minutes of trading.
While it’s unclear if there was any wrongdoing as of now, NYSE management is looking into the matter and we will wait for any word on the outcome of this probe.