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Citadel Securities is urging U.S. regulators to return $119 million in fees it says were improperly collected to finance the Securities and Exchange Commission’s consolidated audit trail, a key market surveillance system.

In a petition submitted to the SEC earlier this month, the high-frequency trading firm called for changes to the operating plan governing the audit trail, arguing that the funds were gathered under a funding structure later deemed unlawful by a federal appeals court.

The request follows a July 2025 decision by the Eleventh Circuit Court of Appeals, which ruled that the prior funding framework unfairly placed the full cost of the system on broker-dealers. The court found that approach unreasonable, raising questions about the legitimacy of fees already collected.

Citadel claims organizations overseeing the audit trail, including major stock exchanges and the Financial Industry Regulatory Authority, are holding $119 million accumulated under the now-invalid model. According to the firm, those funds are currently being spent while the SEC continues to review the future of the surveillance program.

Citadel warned that drawing down the reserves undermines the appellate court’s ruling and asked regulators to require a full refund. As an alternative, the firm said it should receive at least $72 million that exceeded limits previously set on reserve balances.

The company also pointed to statements from audit trail administrators indicating that the entire reserve could be exhausted by August, heightening the urgency for regulatory intervention.

The SEC declined to comment on the petition.

In parallel, Citadel has filed a lawsuit in federal court in Washington, seeking to prevent the administrators from spending the disputed funds while the legal challenges continue.

Administrators of the consolidated audit trail have defended their actions, saying the court decision did not explicitly address reserve funds and that their use remains consistent with existing rules. The dispute adds to ongoing uncertainty surrounding the audit trail, which was created in response to the 2010 “flash crash” to help regulators better track market activity during periods of extreme volatility.