On Friday, a rumor shot around social media that Jen Psaki’s brother was a portfolio manager for Citadel. So we wanted to address the rumor with some facts.
Now why that would be important, if true, was because Citadel’s name has been bandied about prominently in the GameStop story, because Citadel contributed money, along with Point72 to rescue the hedge fund Melvin Capital with a
$2.75 billion investment after it took an almost 30% loss in the first three weeks of this year, mostly because of trying to short GameStop.
But beyond that while Robinhood promises to “democratize finance for all” because it’s not making a lot of money from fees, it makes money from trades which are sold to “market makers” and Citadel Securities is Robinhood’s largest customer.
As the Financial Times explains:
Citadel Securities pays tens of millions of dollars for this order flow but makes money by automatically taking the other side of the order, then returning to the market to flip the trade. It pockets the difference between the price to buy and sell, known as the spread.
But Citadel denied they were involved in any way in telling Robinhood what to do in this instance, according to Fox.
“Citadel is not involved in, or responsible for, any retail brokers’ decision to stop trading in any way,” a spokesperson for the hedge fund said in a statement.
“Citadel Securities has not instructed or otherwise caused any brokerage firm to stop, suspend, or limit trading or otherwise refuse to do business,” the statement added. “Citadel Securities remains focused on continuously providing liquidity to our clients across all market conditions.”
Citadel LLC and the market maker Citadel Securities have a firewall between them, the latter does not know the positions of the former. Citadel Execution Services, part of the market-making business saw the most order flow from Robinhood during the third quarter.
So the internet discovered that there was a portfolio manager for Citadel whose name was Jeffrey Psaki. Given the relatively unusual name, they automatically assumed a connection to Jen Psaki, the Press Secretary for Joe Biden. The word shot around that it was her brother. That was even added into Wikipedia today but then removed.
So if you saw a Wikipedia entry that was removed, the revisions on the Wikipedia page show that it was only added today after the story spread, it wasn’t there before.
There’s a good reason for that. Because based on all available familial information I can find about Jen Psaki, she has no brother, much less one named Jeff or Jeffrey. She only has two sisters.
Nor is Jeff her father. Her father is Jim Psaki, who was a real estate developer. Nor is it her one uncle, who is Michael A. Psaki. Nor is it a first cousin. She doesn’t appear to have any first cousins based upon her grandfather’s obit in 2014 which you can see here.
Here’s also a local Greenwich take (she’s from Connecticut) when she left the White House under Obama. “Psaki is the eldest of three daughters of Jim Psaki, of Greenwich, and Eileen Medvey, of Stamford.” It also mentions only her two sisters, just like the obit. No brother.
So while it would be interesting if true, it’s not. But it is true that Biden Treasury Secretary Janet Yellen got paid a boatload by Citadel, as we reported, as well as many other companies which raises a question about how much influence such companies would have in her decisions and if Yellen should be “monitoring” this situation as Psaki said she was.
