On Oct. 9, billionaire Ken Griffin, the head of a multinational financial services company, gave $2 million to a super PAC called Georgia United Victory (GUV), which had originally been launched by allies of Georgia Gov. Brian Kemp but at the time exclusively supported Sen. Kelly Loeffler's election campaign.
Griffin ranks among the richest people in America, and during the 2020 election cycle he spent at least $57 million to support conservative candidates, most of that on Republicans in tight U.S. Senate campaigns. He donated significant sums to support Sen. Susan Collins of Maine, Sen. Cory Gardner of Colorado, Sen. Martha McSally of Arizona and Michigan GOP candidate John James, among others. But his $2 million to GUV on Oct. 9 was one of his 10 largest contributions ever, and he had already given the Loeffler-centric PAC $1 million about five weeks earlier.
Most major Republican donors at that time were avoiding Loeffler's race, a nonpartisan "jungle primary" in which she faced not just Democrats like the Rev. Raphael Warnock — her current opponent in the Jan. 5 Georgia runoff election — but also Rep. Doug Collins, a conservative Republican closely allied with President Trump.
Furthermore, there was no indication that Loeffler needed the money. She is the richest member of Congress, with an estimated net worth of $800 million. After Kemp appointed her to the Senate last January to fill the seat left vacant by the retirement of Republican Sen. Johnny Isakson, she had promised to spend as much as $20 million funding her own campaign. She consistently told voters that her independent wealth conferred an advantage: She would not be bought by corporate interests.
Griffin's donation to GUV on Oct. 9 also came one day after the Wall Street Journal reported that one of his companies, Citadel Securities — a separate entity from the Citadel hedge fund, which Griffin also runs — had reached an initial agreement to buy one of its competitors, a company called IMC, for a price "in the tens of millions of dollars."
Citadel Securities is one of the world's leading "market makers" — meaning a company that quotes both a buy and a sell price for a trade, hoping to make a profit on the spread — and the proposed acquisition would make Citadel Securities the largest designated market maker, or DMM, on the New York Stock Exchange, with domain over trades for more than half of all securities listed on the exchange.
But before that could happen, management at the world's most famous stock exchange — a central institution in American capitalism since its founding in 1792 — had to approve the deal. That followed in due course, and according to a Citadel Securities press release, the acquisition of IMC was finalized on Nov. 18.
As it happens, Kelly Loeffler's husband, Jeffrey Sprecher, is chairman of the New York Stock Exchange — as well as founder and CEO of Intercontinental Exchange (ICE), the company that has owned the exchange since acquiring it in a $10.9 billion deal in 2013. Loeffler herself sits on a Senate committee that oversees Wall Street and the financial markets.
To be clear, there is no evidence of any illegality surrounding Griffin's contributions to the Loeffler super PAC. As for the Citadel Securities/IMC deal, a spokesperson for ICE, Sprecher's company, told Salon by email that NYSE approval "was a straightforward, staff-driven process that had zero involvement from Jeff."
After considerable discussion off the record, Zia Ahmed, a spokesperson for Griffin, issued a statement placing Griffin's donations to Loeffler in the larger context of his political giving in 2020:
Ken supported several diverse and talented Republican candidates in highly-contested races for Senate this year, including Sens. Collins, [Joni] Ernst and McSally, as well as John James. Sen. Loeffler is a successful businesswoman and an exceptionally strong member of the Senate, and Ken supported both Sen. Loeffler and Sen. [David] Perdue in the general and runoff elections.
Still, the circumstances and timing of the Loeffler donations remain distinctive, and serve to illustrate the haze of money, power and influence that surround the newly-minted Georgia senator, who walked away from an immensely lucrative career as a top executive within her husband's firm when she entered politics a little less than a year ago. Given Loeffler's connections, as well as the government oversight she now exercises over those connections, almost every contact she has with her husband's industry reverberates with potential conflicts of interest.
At the time of Griffin's donations, this had been made clear in months of reporting about Loeffler's wealth and corporate ties, as well as the widespread scrutiny she drew, along with several other senators, for a number of well-timed stock trades ahead of the coronavirus pandemic.
A Justice Department investigation later cleared Loeffler of criminal wrongdoing, but she and her husband liquidated all individual stocks — except for their shares of Sprecher's firm, Intercontinental Exchange, the parent company of NYSE.
On Nov. 18, the same day that Citadel Securities formally announced its purchase of IMC, with the runoff campaign between Loeffler and Warnock underway, Griffin gave $5,600 to the Senate Georgia Battleground Fund, a PAC established to support both Loeffler and Perdue (who also faces a Jan. 5 runoff). That curious amount may reflect a misunderstanding: A PAC can accept much larger sums, but in this instance Griffin gave the maximum any individual could have donated directly to the two runoff candidates.
The NYSE says that DMM firms like Citadel Securities are "the cornerstone of the NYSE market model." DMMs analyze market data to match buyers with sellers, executing trades both manually and electronically in real time, sometimes in flashes of a second. Their matchmaking also helps limit volatility, such as during this year, which has proved a boom time for Citadel. In return, DMMs collect small fees on massive numbers of transactions, scrape potentially useful data and, to some degree, shape markets.
Citadel Securities, however, also excels in high-frequency trading, where nanoseconds can make a difference. The combination presents the firm with a virtually inimitable advantage that has vaulted it to the top of its industry.
Ben Edwards, a securities law expert and professor at University of Las Vegas Nevada School of Law, told Salon that Citadel's purchase of IMC would give it a greater presence into the market, especially with the recent rise of app-based trading, an emergent focus for Citadel.
"As Citadel grows in size, its view of the market also expands — likely allowing Citadel to become even more efficient in market making and high-speed trading," Edwards said. "As retail trading expands with apps like Robinhood, market makers should profit significantly by executing uninformed trades."
Citadel Securities' buyout of IMC was a consequential transaction, according to the Wall Street Journal. It reduced the number of DMM firms on the world's most famous stock exchange from four to three, and gave Citadel oversight of daily transactions for more than 60% of NYSE listings, "potentially raising concerns that the DMM business is becoming overly concentrated," the Journal reported.
That consolidation was unlikely to impact the real-time experience of regular investors, Edwards told Salon, but the NYSE might see it as beneficial synchronicity.
"The NYSE may actually welcome Citadel's acquisition of a market maker because it aligns their interests to a greater degree," he said. "Although Citadel and NYSE may not always agree, Citadel's purchase of a NYSE market maker likely means that Citadel isn't going to undermine the NYSE or try to shift order flow away from the NYSE. If they did, it would result in less business for their market-making subsidiary."
Last year Citadel joined a number of other major firms — such as Merrill Lynch, JPMorgan, Fidelity Investments and Bank of America — in opening its own exchange, MEMX, that would compete with the NYSE directly.
"We will not fight it," Sprecher said on a call with investors after the MEMX announcement, a notably different approach than his purported detachment from Citadel Securities' bid for IMC. "We think it has spillover benefits for the New York Stock Exchange."
Sprecher and Griffin were the top two donors to Georgia United Victory, the pro-Loeffler PAC. The third-biggest donor gave $500,000. Again, Griffin was one of the biggest individual donors of the 2020 election cycle, ranking sixth out of all Americans, according to data compiled by OpenSecrets. Sprecher, too, has spent tens of millions of dollars, much of it on his wife's campaign.
But it's also true that before the Nov. 3 general election, GUV apparently received contributions from only a few donors. In the four months between the PAC's July launch and Election Day, Griffin and Sprecher were among only 26 contributors. Griffin's $3 million was exceeded only by Sprecher's $10.5 million, with all other GUV donors chipping in a combined total of about $3 million.
Otherwise, as mentioned above, major Republican donors mostly stayed away from Loeffler during the "jungle primary." That wasn't true of Griffin: Two of his 10 largest donations went to Loeffler, with the rest going to national Republican-oriented committees and to a PAC supporting John James, the Republican candidate taking on Democratic Sen. Gary Peters in Michigan.
In the period before the Nov. 3 election, GUV entirely deployed its resources in going after Rep. Doug Collins, Loeffler's principal Republican opponent, and did not spend a dime attacking Warnock or any other Democrat. From Election Day onward, GUV raised only about $2 million — and that came from 850 individual contributions, which together account for less than Griffin's two contributions before the election.
Collins attacked Loeffler's wealth and her stock trading scandal throughout the fall campaign. "Raising money — especially from small donors — is a great barometer of support and it is clear that Doug has a dedicated grassroots army marching with him," Collins campaign spokesperson Dan McLagan told ABC News in July. "Kelly Loeffler is mainly supported by Kelly Loeffler, her super wealthy stock-exchange-owning husband and a bunch of lobbyists. She leads a very small and lonely parade."
Collins, however, had also vigorously supported President Trump's 2017 tax bill, which disproportionately benefited corporate and financial interests and multinational firms. Between 2014 and 2016, Collins voted against multiple efforts to close offshore tax loopholes like the ones Loeffler and Sprecher have so successfully marketed through Intercontinental Exchange.
In other words, there are no obvious political or ideological reasons why Ken Griffin would value Kelly Loeffler so much higher than Doug Collins, or why he was evidently so much more invested in her success than were other GOP mega-donors. As noted above, however, Loeffler sits on the Senate committee that conducts oversight of stock trading.
"It's safe to assume that the donations are being made because Citadel stands to benefit by keeping her in office," Edwards told Salon. "It may be as simple as desiring to keep Republican control over the Senate. If Sen. Sherrod Brown [a liberal Ohio Democrat] gained control of the Senate Banking Committee, it could create political risk and increased oversight for the industry. Griffin may also believe that she's more likely to understand and support their industry than most because of her prior work and husband."
Loeffler estimated wealth of $800 million makes her by far the richest member of the Senate, but that's only 4% of Griffin's Bloomberg-estimated net worth of $20 billion, which makes him one of the 50 richest people in the U.S.
For millions of Americans, 2020 has been a financial nightmare, but for Griffin — who last year bought the most expensive home in the country, a Manhattan penthouse — it has been a bonanza. The acceleration in stock transactions has made Citadel Securities one of the financial world's biggest winners of 2020: The firm doubled its profits in the first half of the year as compared to 2019, increasing Griffin's personal net worth by about a third, or $5 billion, according to Bloomberg.
"Sen. Loeffler's close familial ties to market makers and the NYSE may make it less likely that she'd consider policy reforms which might benefit the public and hurt Griffin's business," Edwards said. "For example, a transaction-based tax would likely significantly shrink overall trading volume. That isn't something I'd expect her, Griffin or the NYSE to support."
While Griffin's $3 million might seem like pocket change for someone with his immense wealth, it is not paltry to most Americans, or to most political campaigns. Loeffler's campaign, for instance, raised $28 million in total, and only $3.8 million of that amount came from individual contributions. Another $23 million came from the candidate herself.
The Loeffler campaign did not reply to Salon's request for comment. Citadel Securities eventually provided a comment from Griffin's spokesperson, printed above in full.