TD Ameritrade

TD Ameritrade is a broker that offers an electronic trading platform for the trade of financial assets including common stocks, preferred stocks, futures contracts, exchange-traded funds, forex, options, cryptocurrency, mutual funds, fixed income investments, margin lending, and cash management services.[2]

This article is about the online broker. For banks of similar branding, see TD Bank.
TD Ameritrade Holding Corporation
TypeSubsidiary
IndustryFinancial services
Founded1971 (1971) (as Ameritrade)
HeadquartersWestlake, Texas, U.S.
Key people
Joe Ricketts (Founder)
Steve Boyle (Interim President and CEO)
ServicesStockbroker
Electronic trading platform
Revenue $5.452 billion (FY 2018)
$1.998 billion (FY 2018)
$1.473 billion (FY 2018)
Total assets $37.520 billion (FY 2018)
Total equity $8.003 billion (FY 2018)
Number of employees
9,183 (2018)
ParentCharles Schwab Corporation
Websitewww.tdameritrade.com
Footnotes / references
[1]
The company's corporate headquarters, in Omaha, Nebraska

The company was founded as Ameritrade in 1971 before the company acquired competitor TD Waterhouse from the Toronto-Dominion Bank in 2006. The newly combined company was then renamed TD Ameritrade, with Toronto-Dominion Bank keeping about 40 percent minority ownership.[3] In October 2020, Charles Schwab Corporation acquired TD Ameritrade in a $22-billion stock deal that gave Toronto-Dominion Bank 13 percent minority ownership in Charles Schwab.[4]

TD Ameritrade was originally based in Omaha, Nebraska, with major trading centers in Southlake, Texas and St. Louis, Missouri.[5] Charles Schwab plans to move most of the operations to a new combined headquarters in the Dallas–Fort Worth metroplex.[6]

Current operations

As of March 31, 2020, TD Ameritrade had more than 12 million client accounts and client assets of approximately $1.2 trillion. In fiscal 2020 second quarter, the company executed an average of 2.1 million daily average revenue trades per day.[1]

In fiscal 2019, the company derived 33.3% of its revenues from commissions and fees including payment for order flow, 28.5% of its revenues from the company's bank deposit account program, 25.5% of revenues from interest, 9.7% from investment product fees, and 3% from other sources.[1]

History

In 1975, the Securities and Exchange Commission banned the practice of fixed brokerage commissions and Joe Ricketts and three partners opened First Omaha Securities, Inc. in Omaha, Nebraska.[7]

In 1983, Ameritrade Clearing Inc. was established as a central counterparty clearing broker.[7]

In 1988, the company introduced the first quote and order entry system via the push-button telephone.[7]

In 1995, the company acquired K. Aufhauser & Company, Inc., the first firm to offer an electronic trading platform.[7]

In January 1996, TransTerra's Accutrade launched "Accutrade for Windows", an electronic trading platform.[8][9]

In September 1996, the company merged with TransTerra.[10]

In March 1997, the company became a public company via an initial public offering.[11]

In February 2001, the company acquired TradeCast, which had approximately 60 broker-dealer, hedge fund and money management customers, for $67.3 million.[12][13]

In July 2001, the company acquired National Discount Brokers for $154 million, adding $6.3 billion in client assets.[14][15]

In September 2002, the company acquired Datek.[16][17]

In June 2003, the company acquired MyDiscountBroker.com.[18]

In 2004, the company acquired Bidwell in January,[19] BrokerageAmerica in February,[20] and JB Oxford and Company in October.[21]

In January 2006, the company acquired the United States brokerage business branded as TD Waterhouse from Toronto-Dominion Bank. The newly combined company was renamed TD Ameritrade, with the Toronto-Dominion Bank owning 40%.[22][3]

In February 2008, the company acquired accounts from Fiserv.[23]

In May 2008, CEO Joe Moglia announced he would be vacating the CEO position and would become Chairman. He was succeeded as CEO by COO Fredric Tomczyk, who was formerly Vice Chair of Corporate Operations at Toronto-Dominion Bank.[24][25]

In January 2009, the company acquired Thinkorswim, a producer of software for active traders, for $606 million in cash and stock.[26]

In 2013, the company opened a new $250 million headquarters in Omaha.[27]

In 2016, Tomczyk retired as CEO and succeeded by Tim Hockey, who had previously headed the TD Canada Trust retail banking division of Toronto-Dominion Bank.

In September 2017, the company acquired Scottrade, based in St Louis, Missouri, making St. Louis the second-largest hub for the company.[28][29] The transition of client accounts occurred in February 2018.[30]

In April 2018, TD Ameritrade and Havas placed the first advertisement inserted within the bitcoin blockchain.[31]

In August 2019, CEO Tim Hockey announced his departure from TD Ameritrade in early Q1 2020.

In October 2019, TD Ameritrade reduced most online trades to being commission free.[32]

On November 25, 2019, Charles Schwab Corporation announced its intent to acquire TD Ameritrade for approximately US$26B in stock. Corporate HQ would relocate from Omaha to Texas.[33] According to Barrons, "Ameritrade stock fell an additional 26% after the commission cut" in October 2019 and "that further stock-price decline opened the door for Schwab to swoop in and buy the [Ameritrade] without paying an equity premium for the trading revenue that it had helped to wipe out". Toronto-Dominion Bank will have a 13% ownership stake in the newly combined company.[34]

On October 6, 2020, the Charles Schwab–TD Ameritrade merger closed.[4] Charles Schwab says that the two firms will continue to operate as independent brokerages for the next 18 to 36 months until they are fully integrated into one.[6]

On January 28, 2021, the company and other trading platforms restricted the trade of certain heavily shorted stocks such as GameStop, BlackBerry, AMC, Koss Corporation, and Nokia.[35]

Security breaches

In November 2007, the company reported that hackers gained access to most of its clients' names, Social Security numbers, dates of birth, addresses, phone numbers, and trading activity.[36] In 2011, after being sued in a class action, the company settled by agreeing to compensate customers that were victim to identity theft between $50 and $2,500 each.[37] The settlement was criticized for netting the attorneys almost as much money as the victims.[38]

Auction rate securities scandal

In 2009, TD Ameritrade settled a lawsuit alleging it had marketed auction rate securities as short-term investments. The settlement included a $456 million payment and the buyback of the securities, compensating investors for losses.[39][40][41]

Customer losses in reserve money funds

The company recommended to its customers to invest cash holdings in a money market fund that was an affiliate of the Reserve Primary Fund and the fund gained approximately $1 billion in assets as a result of such marketing by the company. The company received commissions from the fund for steering customers. In September 2008, during the financial crisis of 2007–2008, as a result of its holdings in securities of Lehman Brothers, the fund was forced to break the buck and $1 billion in cash equivalents of TD Ameritrade clients were frozen. The company was accused of having a conflict of interest as a result of commissions that it received, for having poor marketing ethics, and for misrepresenting the safety of the investment. Fredric Tomczyk, President of the company, argued that the contract with the Reserve Fund was a standard contract and that "an investment firm has to make money in some way." The company was named in class action lawsuits by its customers and the U.S. Securities and Exchange Commission launched an investigation into its marketing practices. In 2008, the company agreed to reimburse its customers for up to a 3% loss in the Reserve Primary Fund, or up to $50 million. In 2011, the company settled the SEC case and agreed to pay 1.2¢ per share of the Reserve Yield Plus Fund that was held by its customers, or $10 million in total. The Reserve Yield Plus made its final distribution in 2016 and investors received 97 to 98 cents per share in addition to compensation from TD Ameritrade.[42][43][44][45][46][47][48][49][50]

Sponsorships

The company owns the naming rights to TD Ameritrade Park Omaha, for which it pays an average of $1 million a year.[51]

References
  1. "TD Ameritrade Holding Corporation FY 2018 Form 10-K Annual Report". U.S. Securities and Exchange Commission.
  2. "Online Trading Platforms & Tools". TD Ameritrade. Retrieved 2020-01-09.
  3. "Ameritrade Closes TD Waterhouse Acquisition". NBC News. Associated Press. January 25, 2006.
  4. Zochodne, Geoff (October 6, 2020). "TD Bank to book $2.3 billion gain on closing of Schwab–TD Ameritrade deal". Financial Post.
  5. Brown, Lisa (September 18, 2017). "TD Ameritrade closes on purchase of Scottrade, up to 1,000 job cuts planned". St. Louis Post-Dispatch.
  6. Cordes, Henry (October 1, 2020). "TD Ameritrade-Schwab merger becomes final on Tuesday; effect on Omaha jobs unclear". Omaha World-Herald.
  7. "Timeline: Milestones in TD Ameritrade history". Omaha World-Herald. October 31, 2016.
  8. Kamen, Ken (September 2, 2010). Reclaim Your Nest Egg: Take Control of Your Financial Future. John Wiley & Sons. ISBN 9781118004159.
  9. Juds, Scott M. (April 15, 2018). Conquering the Seven Faces of Risk: Automated Momentum Strategies that Avoid Bear Markets, Empower Fearless Retirement Planning. BookBaby. ISBN 9781543931709.
  10. "AMERITRADE HOLDING CORPORATION Form S-1". NASDAQ. January 21, 1997.
  11. George Soros. "Soros Fund Management Llc - 13F Holdings". fintel.io. Retrieved 16 April 2020.
  12. "Company News; ameritrade, in acquisition, seeks institutional clientsS". The New York Times. Bloomberg News. February 15, 2001.
  13. "Ameritrade buys TradeCast". CNN. February 14, 2001.
  14. "Ameritrade in deal to buy NDB.com". Chicago Tribune. August 1, 2001.
  15. "Ameritrade will buy national discount brokers". The New York Times. Reuters. August 1, 2001.
  16. Sorkin, Andrew Ross (April 8, 2002). "Ameritrade In Deal to Buy Online Rival Datek". The New York Times.
  17. Craig, Susanne (April 8, 2002). "Ameritrade Agrees to Buy Datek In $1.29 Billion Stock Agreement". The Wall Street Journal.
  18. "SWS sells Mydiscountbroker accounts for $4.2M". American City Business Journals. June 16, 2003.
  19. "Ameritrade to buy Bidwell & Co". American City Business Journals. November 7, 2003.
  20. "Ameritrade to Acquire Accounts from BrokerageAmerica" (Press release). Business Wire. October 2, 2003.
  21. "Filed by TD Ameritrade Holding Corporation Pursuant to Rule 425 Under the Securities Act of 1933". U.S. Securities and Exchange Commission. October 12, 2004.
  22. Ian, Austen (June 23, 2005). "TD Waterhouse USA Is Sold to Ameritrade". The New York Times.
  23. "Sale of Fiserv unit to TD Ameritrade closes". American City Business Journals. February 4, 2008.
  24. "TD Ameritrade names COO Fred Tomczyk as next CEO". Fox News. Associated Press. May 15, 2008.
  25. "TD Ameritrade COO named next CEO". The Globe and Mail. Bloomberg News. May 16, 2008.
  26. "TD AMERITRADE to Acquire thinkorswim" (Press release). Business Wire. January 8, 2009.
  27. Hubbard, Russell (July 31, 2013). "TD Ameritrade shows off its new $250 million headquarters". Omaha World-Herald.
  28. "TD Ameritrade Closes Acquisition of Scottrade Financial Services, Inc" (Press release). Business Wire. September 18, 2017.
  29. Edwards, Greg (September 18, 2017). "TD Ameritrade closes on acquisition of Scottrade". American City Business Journals.
  30. "TD Ameritrade Completes Scottrade Account Conversion" (Press release). Business Wire. February 28, 2018.
  31. Swant, Marty (April 26, 2018). "TD Ameritrade and Havas Placed an Ad on the Blockchain". AdWeek.
  32. Wheeler, Jonathan (2019-10-08). "TD Ameritrade In A $0 Commission World". Seeking Alpha. Retrieved 2019-10-10.
  33. "Acquisition Information Center". www.amtd.com.
  34. Fonda, Lisa Beilfuss and Daren. "The Charles Schwab–TD Ameritrade Merger Shocked Wall Street. Why It Had to Happen". www.barrons.com.
  35. Gonzalez, Oscar; Priest, David. "Robinhood, TD Ameritrade restrict trading of GameStop, AMC stock". CNET. Retrieved 28 January 2021.
  36. "TD Ameritrade's six million customers hit with security breach". CNET. November 26, 2007.
  37. Bolado, Carolina (September 13, 2011). "TD Ameritrade Settles Data Breach Suit For Up To $6.5M". Law360.
  38. Kravets, David (July 11, 2008). "Ameritrade Hack Settlement: $2 Per Victim, $1.8 Million for Lawyers". Wired.
  39. Pepitone, Julianne (July 20, 2009). "TD Ameritrade settles auction-rate securities case for $456M". CNN.
  40. "SEC Charges TD Ameritrade for Auction Rate Securities Sales Practices" (Press release). U.S. Securities and Exchange Commission. July 20, 2009.
  41. "TD Ameritrade Agrees To Auction-Rate Buyback". The New York Times. Associated Press. July 20, 2009.
  42. HOLZER, JESSICA; MAXEY, DAISY (February 4, 2011). "TD Ameritrade Settles SEC Case Over Reserve Fund". The Wall Street Journal.
  43. Oneal, Michael (November 2, 2008). "Fund losses fuel customers' anger; Revenue-sharing deal raises questions of conflict". Chicago Tribune.
  44. MAXEY, DAISY (September 12, 2009). "Reserve Yield Plus Investors in SEC Plea". The Wall Street Journal.
  45. ANAND, SHEFALI; SCANNELL, KARA (September 25, 2008). "Ameritrade to Make Clients Whole on Primary Fund". The Wall Street Journal.
  46. AMBROSE, EILEEN (December 16, 2008). "Investors feel burned by what looked like a money market fund". The Baltimore Sun.
  47. "Investors in fallen money fund Reserve Yield Plus can't access cash". New York Daily News. Associated Press. October 3, 2008.
  48. "SEC Charges TD Ameritrade for Failing to Supervise Its Representatives Who Sold Shares of the Reserve Yield Plus Fund" (Press release). U.S. Securities and Exchange Commission. February 3, 2011.
  49. "TD Ameritrade investors in Reserve money fund could share settlement". USA Today. Associated Press. February 3, 2011.
  50. "FEDERAL COURT APPROVES FINAL DISTRIBUTION OF ASSETS" (PDF) (Press release). Reserve Funds. April 11, 2016.
  51. "TD Ameritrade Inks Naming-Rights Deal For CWS Ballpark In Omaha". Advance Publications. June 9, 2009.
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