Ken Griffin, financial prodigy turned industry giant

Practically 4 many years ago, the South Florida Sunshine-Sentinel profiled three precocious users of the Boca Raton Community Superior School’s computer club. Even though their classmates had been capturing hoops, the “disc-travel driven trio” have been prepping for a challenge-fixing competition with other Palm Seaside geeks later that month.

It is unclear what occurred with Satish Vadapalli and Wayne Wong, who labored out the challenges with pen and paper just before passing on methods for their third member to bash into a computer. But the latter would go on to depart a main mark on the economic globe.

Kenneth Cordele Griffin is right now 1 of the world’s wealthiest men and women, with a fortune approximated at $26.5bn by Forbes. He is mainly regarded for working his $40bn Chicago-based mostly hedge fund Citadel. But in actuality, his lesser-recognized nonetheless arguably additional crucial pc-driven investing agency Citadel Securities is now the biggest vital to his wealth — and mounting controversy.

This week Griffin bought a $1.15bn stake in Citadel Securities to venture cash corporations Sequoia Cash and Paradigm, electrifying the finance market. The firm is the world’s most important algorithmic “market-maker”, managing more than a quarter of all US shares bought and offered just about every day. Now it is eyeing cryptocurrencies, and a likely preliminary community supplying.

The deal valued Citadel Securities at $22bn, adding $5bn to Griffin’s web worthy of and lifting him to 26 in the Forbes desk of the richest Us residents. Numerous fellow financiers ended up agog at the deal.

“What produced Michael Jordan Michael Jordan is not just that he jumps increased and runs more rapidly, he’s sui generis. Ken is similar in his discipline,” states Lloyd Blankfein, the previous chief executive of Goldman Sachs and a friend of Griffin. “He’s a great trader, but he’s also a terrific businessperson, and individuals points do not usually go with each other. It is like a runner who wins in both the 100m dash and a marathon.”

Nevertheless, Griffin has also turn out to be a magnet for ire. For some he embodies the finance industry and its intended ills. In Chicago his political machinations elevate hackles. Conspiracy-minded retail investors on world wide web message boards this kind of as WallStreetBets portray him as the malevolent head of an evil economic empire, even nevertheless the US economical watchdog debunked their promises.

Internally, Griffin is far more highly regarded than cherished, and the tradition is said to be brutally rigorous, even for Wall Street.

“There’s not a ton of empathy,” one particular former worker informed the FT last yr. “That can be an asset when factors are heading ridiculous, as I really do not imagine he feels strain the exact same way as anyone else. There’s just this motivation to be the greatest at everything, and every person is both serving to him execute that, or not.”

In an FT interview very last yr, replete with the extensive pauses and completely-fashioned clipped sentences he speaks in, Griffin shrugged off this sort of complaints: “If you’re wired to get pleasure from currently being a excellent competitor, you love doing work right here,” he mentioned.

There were a couple of hints of Griffin’s towering drive in the Solar-Sentinel profile. The 17-year old — captured in spectacles, a matted stripy shirt and traditional zip-up Adidas jacket — was currently a prodigy at the time.

Lively in the laptop club, he was also president of the maths club and a budding entrepreneur. The middle-class teen had set up a mail-buy software firm selling instructional programmes to university professors out of his home, which permitted him to hide his youth from consumers.

His very first dalliance with finance arrived in 1980, when the 11-12 months old Griffin wrote a university paper on how he planned to research the stock market place. Still it was as a Harvard undergraduate that he to start with commenced trading aggressively, famously convincing his dormitory to allow him put in a satellite dish so he could get up-to-day inventory charges.

The dish was set up just in time for the Black Monday crash of 1987, when Griffin was previously running $265,000. Thankfully, he was betting on stocks falling, and produced a killing. Griffin’s returns captivated the consideration of hedge fund pioneer Frank Meyer, who bankrolled the launch of Citadel.

By 2001, Institutional Investor declared him the “boy speculate” of his sector. “Griffin is to hedge funds what pimply faced dotcom billionaires were briefly to the World wide web: the boy god, nerd built very good, self-taught polymath of finance,” it wrote. A few years afterwards, it all pretty much arrived crashing down.

Column chart of Annual net returns of Wellington ({21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}). showing Citadel has recovered from a near-death experience in 2008

Despite a status for avoiding issues, Citadel misplaced an astonishing $8bn in the money crisis. It was inevitably pressured to freeze trader withdrawals, often a demise knell.

Rather, Griffin resurrected Citadel as 1 of the hedge fund world’s undisputed giants, spun out its large-frequency trading arm as Citadel Securities and developed it into a formidable corporation in its have suitable. In 2020 Citadel sat fourth on the record of the optimum-grossing cash of all time, with cumulative gains for traders of about $42bn, when Citadel Securities churns out gains from the retail buying and selling boom.

There are handful of signals that Griffin is specifically worried by the opprobrium of world-wide-web community forums. When countless numbers of cryptocurrency fans collected around $40m to get a exceptional first-edition copy of the US Structure final yr, he outbid them on a whim, triggering outrage. The successful bid of $43.2m amounted to significantly less than 3 times of Citadel Securities’ investing revenues.

“2008 practically introduced him down, and he’s rebuilt like a magician. It’s phenomenal,” stated just one hedge fund executive. “He’s kind of like the Elon Musk of money.”

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Minnie Arwood

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