NYC Comptroller Candidate Criticized Over Misinformation Regarding Payment for Order Flow (PFOF)

Armand Domalewski, a prominent figure, recently took to social media to publicly criticize a former New York City Comptroller candidate for allegedly spreading "complete falsehoods" regarding Payment for Order Flow (PFOF). Domalewski asserted that the individual, who was "pretty close to be NYC Comptroller," demonstrated a fundamental misunderstanding of the financial mechanism, claiming that PFOF transactions do not sell "at cost" but rather "at a significant loss."

The tweet, posted by Armand Domalewski, highlighted a perceived lack of basic research from the unnamed candidate. This criticism comes amidst ongoing discussions about financial transparency and consumer protection in the financial sector, particularly concerning practices like PFOF. The debate often centers on whether retail investors receive the best possible execution prices when their orders are routed through firms that engage in PFOF.

Payment for Order Flow is a controversial practice where brokerage firms receive compensation from market makers for directing client orders to them for execution. Critics argue that this practice can create conflicts of interest, as brokers might prioritize payment from market makers over achieving the best possible price for their clients. Proponents, however, contend that PFOF allows brokers to offer commission-free trading, benefiting retail investors.

The Securities and Exchange Commission (SEC) has actively scrutinized PFOF, with SEC Chair Gary Gensler stating that the retail public is "getting a raw deal" due to the lack of a best execution rule and transparent auctions. Gensler has suggested measures such as banning PFOF or implementing a best execution rule to address these concerns. This regulatory attention underscores the significance of the debate surrounding PFOF and its impact on individual investors.

While the specific NYC Comptroller candidate was not named in Domalewski's tweet, the criticism points to a broader expectation for public officials, especially those vying for financial oversight roles, to possess a thorough understanding of complex financial instruments and practices. The discussion around PFOF continues to be a key area of focus for regulators and consumer advocates alike, emphasizing the need for accurate information and robust investor protections.