Washington, D.C. — An analysis from government watchdog Accountable.US finds some of Senator Pat Toomey’s largest campaign contributors are among the biggest beneficiaries of his recently introduced Investor Freedom Act of 2021. Toomey’s bill seeks to stop the Securities and Exchange Commission (SEC), the Financial Regulatory Authority (FINRA), and national securities exchanges from “issuing any rules that prohibit” payment for order flow (PFOF) – the compensation a brokerage firm receives for directing a trade order to a third-party, which can create a conflict of interest between a broker’s duty of best execution and the economic incentive that third parties provide as compensation for directing trades.  

Accountable.US found leading brokerage firms and market makers that use PFOF in either receiving compensation or seeing increased trading volume have donated $215,250 to Toomey’s campaign committees. That includes $18,500 from SIFMA, the “leading” trade association for financial markets, whose members include trading platforms like Robinhood, which received $271.2 million in PFOF revenue in just the first half of 2020. Perhaps uncoincidentally, Toomey’s bill came just over a week after SEC Chairman Gensler said he was looking into potential reforms, or even a prohibition, on the practice due to potential problems it creates. 

“Pat Toomey has been in the pocket of Wall Street his entire career, usually at the expense of Main Street. So, it’s no surprise Toomey is attempting to fend off any regulation of a risky practice that leaves everyday traders vulnerable to conflicts of interest and exploitation at the hands of unaccountable third parties used by brokerage firms,” said Accountable.US president Kyle Herrig. “It’s obviously one of Toomey’s parting gifts back to the financial industry as a Senator. But like in the Gamestop fiasco, this kind of shadowy behavior rigs the market against retail investors in favor of Wall Street.” 

Other major campaign donors that stand to gain from Toomey’s bill include:  

  • $21,000 from Morgan Stanley, which in 2020 acquired E*Trade, a trading platform that earned $189.98 million from PFOF revenue in the first half of that year.
  • $16,000 from Charles Schwab, which received $621 million in PFOF revenue in 2020 and has received $1.5 billion from PFOF in just the first three quarters of 2021 after its 2020 acquisition of TD Ameritrade.
  • The billionaire Ricketts family, which founded TD Ameritrade, has donated $16,200 to Sen. Toomey.
  • Billionaire Ken Griffin, the founder and CEO of Citadel, which pays brokerage firms such as Robinhood for directing orders to it, has donated at least $17,800 to Sen. Toomey.  

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