Billionaire Ken Griffin hits Pritzker hard on crime, but his firms have millions invested in gun and ammunition makers, records show

Ken Griffin, founder & CEO of Citadel, speaks to the Economic Club of Chicago in October. | Economic Club of Chicago/Youtube

With Chicago-area homicides, carjackings and expressway shootings up in 2021, billionaire investment tycoon Kenneth Griffin minced no words last fall when he singled out one man, Democratic Gov. J.B. Pritzker, for not confronting the crime scourge terrorizing the region.

But as Griffin characterized Pritzker’s response as a “disgrace,” Griffin’s $46 billion hedge fund — Citadel — and its corporate cousin had investments and holdings in gun and ammunition makers, federal securities records show.

In fact, Chicago police data analyzed by WBEZ show nearly one of every four guns recovered from city homicides since 2017 came off assembly lines of firearms companies in Citadel’s stock portfolio — weapons involved in the same crime wave Griffin blames on the governor.

Griffin’s activism and checkbook are shaping the Illinois Republican Party as the GOP looks for big gains in Springfield this fall. Griffin and his favored gubernatorial candidate, Aurora Mayor Richard Irvin, are focusing on crime to block Pritzker’s reelection.

Citadel’s hedge fund and its related, Griffin-owned market-maker firm, Citadel Securities, reported combined investments and holdings in gun and ammunition makers exceeding $86 million last December, according to federal securities disclosures.

But a company spokesperson told WBEZ that Griffin doesn’t choose Citadel’s stock holdings, and they have no correlation to Chicago’s crime wave.

“These investments make up less than .01% of our portfolio,” Citadel spokesperson Zia Ahmed said, calling any links between the companies’ stocks and violent crime in Chicago “quite a stretch.”

Ahmed said the vast majority of Citadel’s positions in gun and ammunition companies are held by Citadel Securities, which he said does not make direct investments but instead owns stocks investors buy and sell through third-party brokerages.

Griffin is Illinois’ wealthiest individual, ranking 60th on Forbes’ list of most prosperous Americans with a net worth estimated at $25.6 billion. That’s roughly seven times larger than the estimated $3.6 billion fortune Forbes attaches to Pritzker.

The two are arch nemeses, with Griffin pledging an “all-in” effort to unseat Pritzker. Griffin pumped $36 million into the losing campaign of Pritzker’s GOP rival in 2018, incumbent Gov. Bruce Rauner. And in 2020, Griffin spent nearly $54 million to defeat Pritzker’s constitutional bid to make wealthy Illinoisans pay more income taxes.

This month, Griffin contributed $20 million to Irvin, who is in a potential five-way Republican gubernatorial primary set for June.

Strip out the politics, and crime is a blemish on the city and state landscape.

In 2021, the Cook County medical examiner’s office handled 1,087 homicides, the most since 1994. The Illinois State Police disclosed expressway shootings last year were six times greater than three years earlier. Chicago carjackings topped 2,100 last year, the highest in at least 20 years.

As governor, Pritzker has focused on criminal justice issues but not been a frequent advocate for penalty enhancements.

In his budget address, Pritzker called it “cynical and counterproductive to simply shout ‘lock them up’” without investing in crime prevention. One exception is his push for tougher sentences for those convicted of murdering state child-welfare workers.

Gov. J.B. Pritzker

Pritzker enacted a criminal justice package last year that mandated police body cameras by 2025 and ends cash bail in 2023; beefed up State Police staffing, including along expressways; and deployed the Illinois National Guard at Mayor Lori Lightfoot’s request to respond to civil unrest after George Floyd’s murder in Minneapolis.

But Griffin poked at that record, with his criticism reaching a zenith last October when he was the headliner at the Economic Club of Chicago after an eight-year hiatus.

“Since I last spoke in 2013, 25,000 of my fellow Chicagoans have been shot. And it is a disgrace that our governor will not insert himself into the challenge of addressing crime in our city,” Griffin said. “It is a disgrace.”

Days before Griffin spoke, his companies held shares in five gun and ammunition makers with a combined value of more than $103 million as of September 2021, a company Securities and Exchange Commission filing showed.

A new SEC filing submitted earlier this month showed Citadel and Citadel Securities held more than $86 million worth of shares in gun and ammunition companies last December.

In that disclosure, Citadel listed nearly $13.7 million in Smith & Wesson Brands Inc. stock and another $21.2 million in Sturm, Ruger & Co. Inc.

Citadel and Citadel Securities had another $51.2 million in ammunition makers Olin Corp., Ammo Inc. and Vista Outdoor, the filing showed.

Citadel said ammunition manufacturers should not be included in WBEZ’s reporting.

“Only two, Smith & Wesson and Sturm, Ruger, are true gun manufacturers and germane,” Ahmed said. “As far as we can tell, the other . . . companies have broader businesses, such as outdoor equipment. As has been discussed, these other companies do not manufacture the weapons used in the street violence that plagues Chicago.”

He also insisted the majority of the holdings the company reported to the SEC weren’t investments controlled by Citadel’s hedge fund but instead were securities associated with Citadel Securities.

“Citadel Securities (the market making company) is separate from Citadel (the hedge fund business),” Ahmed said in an email. “It does not make ‘investments’ in [Smith & Wesson and Sturm, Ruger]. It holds them and tens of thousands of other securities, so investors can buy and sell them as their investments.”

Citadel Securities works as a New York Stock Exchange-registered “market maker” that purchases big swathes of securities for investors to buy or sell often through online brokerages like Robinhood or Charles Schwab.

Ahmed said Citadel Securities is compelled to have holdings in gun and ammunition stocks.

“As a designated market maker at the [New York Stock Exchange], we are obligated to provide a quote in the stocks that they decide to list on the exchange,” he said. “More generally, our clients (retail brokerages such as Fidelity, Vanguard, Schwab, etc.) expect us to provide liquidity in all stocks so their clients (individual investors like me and you) can buy/sell whatever company they want.”

As such, Ahmed objected to Citadel Securities’ holdings being part of WBEZ’s reporting.

But those holdings were disclosed alongside the hedge fund investments in the same single Citadel filing with the SEC, which dictates the rules over how and when companies report their stock ownership.

And several securities lawyers interviewed by WBEZ said they knew of no requirement that a financial behemoth like Citadel Securities must trade in the weapons sector. In fact, the company could avoid it entirely if it wanted to, they said.

“They have the economic leverage that they could tell the New York Stock Exchange what they’re going to do, and the New York Stock Exchange has no alternative because there really isn’t an alternative right now to Citadel,” said Columbia University law professor John C. Coffee, Jr., a leading expert on securities law and director of the Center on Corporate Governance at Columbia Law School in New York City.

Duke University law professor James D. Cox, another securities law expert, also questioned Citadel’s explanation.

“I’m not aware of any . . . requirement that market makers have to hold themselves out to represent all possible securities that can be traded. They usually do it selectively,” he said. “There’s no requirement that all God’s children have to be represented by each market maker.”

Coffee and Cox have co-authored textbooks law school students use to study securities laws and regulations.

And a former federal regulator said there is little reason to disregard the holdings from Citadel’s market maker.

“Based on their holdings, it appears that they have pretty significant engagement and exposure to the sector, and that’s a choice they’re making whether for their hedge fund or their market maker,” said Tyler Gellasch, a former SEC lawyer and executive director of Healthy Markets Association, a nonprofit investor advocacy group.

“Those are securities they own,” he said. “I think it’s fair to say if they own the securities, they own the securities.”

In Chicago, anti-violence advocates condemned Citadel’s investments and holdings.

“You absolutely cannot be a voice about crime and murder or shootings on our streets when your company is a major investor in gun manufacturers,” said the Rev. Michael Pfleger, pastor of Faith Community of St. Sabina Church.

The Rev. Michael Pfleger speaks last year at a news conference he and people who lost loved ones to gun violence present a list of demands aimed at decreasing homicides in Chicago.

Ahmed said Griffin was unaware of his companies’ gun and ammunition holdings.

“Ken neither has made nor is he aware of these investments, which are smaller than infinitesimal in light of the size of our firm,” he said.

Ahmed turned down multiple requests to interview Griffin after WBEZ questioned the holdings.

While some of Griffin’s philanthropy has been immense — he steered $125 million to the Department of Economics at the University of Chicago — Crain’s Chicago Business has reported only a “sliver” of his private giving goes to anti-violence and policing initiatives. One example was his $10 million grant to the University of Chicago Crime Lab.

“Like gifts from our other philanthropic funders, Ken Griffin’s gift has enabled the Crime Lab to advance our mission as an independent research organization that works with the public sector and nonprofits to design, test and scale data-driven solutions that address the dual crises of gun violence and America’s broken criminal justice system,” said Roseanna Ander, the Crime Lab’s executive director.

In the 2018 Crime Lab grant announcement and his Economic Club speech, Griffin spoke about the impact of violent crime but not about the role guns play.

Through an open-records request, WBEZ sought five years of Chicago police data about the brands of guns recovered from violent crime scenes in the city — homicides, carjackings and criminal sexual assaults, among them.

Chicago police provided data on 4,647 firearms recovered in violent criminal incidents between Jan. 1, 2017, and mid-January of this year.

Those records showed Smith & Wesson firearms were the second most commonly recovered gun tied to homicides during the five-year period, accounting for nearly 17% of all guns recovered for that crime.

Sturm, Ruger guns were the fourth most recovered guns for homicides, accounting for 8% of recovered weapons tied to that crime, the data showed.

Neither company responded to WBEZ for this report.

Smith & Wesson guns have been used in some of the region’s worst crimes in recent memory.

Federal court records show police recovered a Smith & Wesson gun that was linked through ballistic tests to more than a dozen bullet casings inside an Englewood home, where 13 people were shot. The December 2019 crime is regarded as one of the biggest mass shootings in the city.

A Smith & Wesson firearm was used by a gunman in the February 2019 mass shooting at the Henry Pratt manufacturing plant in Aurora, where five company employees were fatally shot and five police officers injured.

Irvin was mayor of Aurora at the time of the shooting. A campaign aide told WBEZ Irvin does not take issue with Citadel’s investments and holdings.

“Mayor Irvin is a supporter of the Second Amendment, owns two licensed firearms and believes that Mr. Griffin, like everyone else in this country, is free to invest in whatever industry he chooses,” Irvin spokesperson Eleni Demertzis said.

Aurora Mayor Richard Irving at a vigil in 2019 for five people killed at a shooting at the Henry Pratt Company

A Northeastern Illinois University expert on Chicago street gangs and violence said violent crimes are connected to upstream investments in firearms and ammunition manufacturers.

“Until we address those issues, those largest systemic issues, like investments in gun manufacturing, we’re not going to solve this problem on the streets,” said Lance Williams, professor of urban community studies at Northeastern’s Jacob H. Carruthers Center for Inner City Studies.

Pritzker’s current state financial disclosures do not show gun or ammunition holdings.

However, Irvin’s campaign noted that a 2017 state financial disclosure by Pritzker showed his investment in Elliott Associates LP, which held shares in Cabela’s, a retail sporting goods chain that specializes in hunting and fishing gear and sells guns and ammunition.

A Pritzker campaign spokeswoman said the governor sold his interest in Elliott in 2015.

Griffin’s companies own nearly $93 million in shares of a retail sporting goods chain called Academy Sports & Outdoors, which also sells guns and ammunition, Citadel’s latest SEC filing shows.

Ahmed wouldn’t divulge Citadel’s plans in the weapons sector but insisted its current involvement doesn’t undercut Griffin’s credibility.

“Gov. Pritzker has the responsibility to address violent crime. Trying to tie our tiny, tiny holdings to somehow contributing to violent crime in Chicago is, respectfully, quite a stretch.”

But Pfleger disagrees.

“How do you talk about what the governor is doing about crime when you are a major investor to the very industry and the gun manufacturers that are the major contributors to the crime and the violence in our cities,” Pfleger said. “How hypocritical is that?”

Dave McKinney covers Illinois politics and government for WBEZ. Follow him on Twitter @davemckinney

Editor’s note: Chicago Public Media receives philanthropic support from the Pritzker Foundation and the Pritzker Traubert Foundation. Gov. J.B. Pritzker is not involved with either group.