TD Ameritrade

TD Ameritrade Holding Corporation

Type	Public company
Traded as	NASDAQ: AMTD
Industry	Finance and Insurance
Founded	Omaha, Nebraska (1971)
Headquarters	Omaha, Nebraska, United States
Key people	Tim Hockey, CEO Joe Moglia, Chairman J. Joseph Ricketts, Founder Steve Boyle, CFO Tom Bradley, President, Retail Tom Nally, President, Institutional[1]
Services	brokerage firm
Revenue	US$3.247 billion (FY 2015)[1]
Operating income	US$$1.325 billion (FY 2015)[1]
Net income	US$$813 million (FY 2015)[1]
Total assets	US$$26.375 billion (FY 2015)[1]
Total equity	US$$4.903 billion (FY 2015)[1]
Number of employees	5,700 [1]
Website	www.amtd.com www.tdameritrade.com

TD Ameritrade is an American online broker based in Omaha, Nebraska. The TD stands for Toronto-Dominion. TD Ameritrade Holding Corporation is the owner of TD Ameritrade Inc. Services offered include common and preferred stocks, futures, ETFs, option trades, mutual funds, fixed income, margin lending, and cash management services.^[2]

Current operations

As of September 30, 2015, Ameritrade had 6,621,000 funded customer accounts and client assets of $667.4 billion.^[1]

History

TD Ameritrade traces back its lineage to a small investment banking firm and First Omaha Securities, Inc. (later Accutrade) in Omaha, Nebraska. Ameritrade Clearing Inc. was established as a clearing broker in 1983, and by 1987 TransTerra Company became the holding company for Ameritrade, and the company was subsequently known as TransTerra Company.

In 1988, the company introduced the first quote and order entry system via the touch-tone phone.

In 1995, the company acquired K. Aufhauser & Company, Inc. and its WealthWeb, the first firm to offer online securities trading, receiving the first order in August 1994.

In October 1995, Ameritrade acquired All American Brokers. In January 1996, TransTerra's Accutrade launched "Accutrade for Windows," the first online investing system that let individuals partake in program investing and basket trading. By May 1996, TransTerra launched an Internet only broker called eBroker, and by November, TransTerra Company became Ameritrade Holding Corporation.

In March 1997, Ameritrade became a publicly held company, and its IPO opened at $15 per share.

In August 1999, Accutrade (then a division of Ameritrade) acquired The R.J. Forbes Group, Inc. Ameritrade formed Freetrade in November 2000, which provided commission-free equity market orders. Freetrade was later replaced by Ameritrade Izone, which offered $5 equity market orders, though it no longer exists.

In 2001, Ameritrade made two acquisitions: the February acquisition of TradeCast, giving Ameritrade a presence in the business-to-business arena, and the September acquisition of National Discount Brokers Corporation, adding $6.3 billion in client assets.

In 2002, Ameritrade merged with Datek Online Holdings Corporation, and changed commissions to $10.99 from $8 for market orders and $12 for limit and stop orders. Ameritrade purchased Mydiscountbroker.com in June 2003, and client accounts reached 3 million. In 2004, Ameritrade completed the purchase of Bidwell and Company in January, BrokerageAmerica in February, Investex in May and JB Oxford and Company in October. As of August 2007, there were reports suggesting that Ameritrade was engaged in merger talks with E*TRADE.

On January 24, 2006, Ameritrade Holding Corporation acquired TD Waterhouse USA from TD Bank Financial Group.^[3] Following the acquisition, it renamed itself TD Ameritrade. TD Ameritrade is one of the largest online brokerages, with 6.3 million funded client accounts and $663 billion in client assets.^[4] Revenue and net income are expected to increase to $1.8 billion and $557 million, respectively. TD Bank now owns 39% of TD Ameritrade, and purchased Ameritrade's Canadian brokerage operations for $60 million cash. As part of the acquisition, Ameritrade investors received a special one-time $6 dividend, funded from Ameritrade borrowings and excess cash contributed to TD Waterhouse USA by TD Bank. TD Bank will limit their ownership of TD Ameritrade to 45% for up to ten years after the acquisition, while founder J. Joseph Ricketts will limit his family's ownership of TD Ameritrade to 29% for ten years after the acquisition. Ameritrade CEO Joe Moglia became the CEO of TD Ameritrade.

In 2008, long-time CEO Joe Moglia announced he would be vacating the CEO position in the upcoming fall after seven years to pursue other interests. Fred Tomczyk, the former COO, was named his successor and took over in September 2008. Rumors started that the company was going to move its headquarters out of the Omaha area after Moglia took over the Chairman position from founder and former CEO J. Joseph Ricketts. With the departure of Ricketts, who founded the company in Omaha, the company for the first time in its history had no members from the founding family on its management team, outside of the two that remained on the Board of Directors. Tomczyk further strengthened the rumors when he stated that he would not be moving to Omaha, but rather staying in the New York City area, where he is based. However, those rumors were put to rest when in October 2008 plans were unveiled for the new TD Ameritrade headquarters in Omaha. The new headquarters would consolidate the call center and corporate offices together into one building. The new building was planned for development in the Old Mill area of Omaha, with a scheduled completion date of 2013. Tomcyzk later confirmed that the company considered moving out of the Omaha area, but decided to stay because of the large number of employees based in Omaha.

On January 7, 2009 TD Ameritrade acquired Thinkorswim Group Inc. (NASDAQ:SWIM), including its INVESTools Investor Education division, in a cash and stock deal valued at approximately $606 million. The transaction aimed to advance TD Ameritrade's growth strategy on the trading side of the business.^[5]

In October 2016 TD Ameritrade and Scottrade agreed that TD would purchase Scottrade for US $4 Billion; the deal was expected to close in September 2017. The deal would be done in two steps with TD Bank Group buying Scottrade's banking arm for $1.3 billion with the bank merging into TD Bank NA, and then TD Ameritrade acquiring Scottrade Financial Services for $2.7 billion. The proposed deal was TD's largest acquisition as of October 2016.^[6]

Awards

The company has received various awards, which are listed on its website.^[7]

Controversies

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. ^[8] In 2011, the company settled a related class action lawsuit by agreeing to compensate customers that were victim to identity theft.^[9]

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.^[10]

Customer losses in reserve money funds

TD Ameritrade recommended for its customers to invest cash holdings in a money fund managed by the Reserve, RYPQX (the Reserve Yield Plus Class R fund), from which TD Ameritrade received fees.^{[11][12][13][14]}

In September 2008, the fund broke the buck and money assets of thousands of TD Ameritrade clients, including many senior citizens, were frozen. For the larger Reserve Primary Fund that also broke the buck, TD Ameritrade said it will reimburse clients for the first 3% loss. Other Reserve funds, such as the Interstate Tax Exempt Fund, were sold by TD Ameritrade, and were caught up in the Primary Fund's failure, leaving investors in these funds without liquidity. However, the Reserve Yield Plus fund previously marketed by the company was not covered by the offer.^{[15] [16]}

Investors alleged a conflict of interest for TD Ameritrade to promote the fund to its clients in the presence of a distribution agreement between The Reserve and TD Ameritrade that earns Ameritrade an undisclosed slice of fee revenue. Fred Tomczyk (TD Ameritrade president) argued that the contract was a standard one and that "an investment firm has to make money in some way."^[11] According to the Chicago Tribune article, the distribution agreement clearly was effective: assets in Yield Plus Class R shares sold almost exclusively to TD Ameritrade clients shot from almost nothing in 2006 to $770 million by March of this year, public documents show. Another class dominated by the Omaha firm shot from $2 million to $171 million.

The Securities and Exchange Commission, along with several state regulatory agencies, investigated TD Ameritrade's fund promotion and marketing practices.^[17][18] The company is named in a class action lawsuit for misrepresentation and marketing of the Reserve Yield Plus fund as a money market fund.^[19] The Sacramento Bee reported that the SEC filed a civil complaint against Reserve Management, chairman Bruce Bent Sr., and vice chairman and president Bruce Bent II in May 2009. It also reported anticipated investor losses of 8.3%, and TD Ameritrade spokeswoman Kim Hillyer said it will cover up to $50 million of losses in the Primary Fund.^[20]

In 2011, the company settled the case and agreed to pay 1.2¢ per share of the fund that was held by its customers.^[21]

Sponsorships

The company owns the naming rights to TD Ameritrade Park Omaha for which it pays an average of $1 million a year.^[22]

See also

• Auction rate security
• Comparison of online brokerages
• Investing
• Marketing ethics
• Stockbroker
• Sweep account
• Toronto-Dominion Bank

References

External links

• Official website
• TD Ameritrade Client and Prospect Home Page
• TD Ameritrade API
• TD Ameritrade Company Fact Sheet
• Hoover's Online - TD Ameritrade Fact Sheet
• Yahoo! - TD Ameritrade Holding Corporation Company Profile
• TD Ameritrade .NET SDK
• Brokerage Jobs with TD Ameritrade