TD Ameritrade

This article is about the online broker. For banks of similar branding, see TD Bank.
TD Ameritrade Holding Corporation
Public company
Traded as NYSE: AMTD
Industry Finance and Insurance
Founded Omaha, Nebraska (1971)
Headquarters Omaha, Nebraska, USA
Key people
 Fredric Tomczyk, CEO
Joe Moglia, Chairman
J. Joseph Ricketts, Founder
William Gerber, CFO
Tom Bradley, President, Retail
Tom Nally, President, Institutional[1]
Services brokerage firm
Revenue Increase US$3.247 billion (FY 2015)[1]
Increase US$$1.325 billion (FY 2015)[1]
Increase US$$813 million (FY 2015)[1]
Total assets Increase US$$26.375 billion (FY 2015)[1]
Total equity Increase US$$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. 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]

Awards

The company has received various awards, which are listed on its website.[6]

TD Ameritrade earned five stars and finished second overall in the StockBrokers.com 2011 Online Broker Review with the thinkorswim platform taking top honors.[7] In 2012, they earned five stars, a first place finish, and a slew of Best in Class awards along with thinkorswim once again taking top trading platform.[8] For 2013, TD Ameritrade repeated their #1 Overall performance, earning four and a half stars, a first place finish, thinkorswim as top trading platform, and finished first for new investors.[9] In 2014, TD Ameritrade once again won #1 Overall Broker for the third year in a row, receiving a four and a half star rating, and were awarded #1 Desktop Platform for thinkorswim.[10] In 2015, TD Ameritrade received #1 Overall Broker for the fourth year in a row, being awarded a four and a half star rating, and recognized for the #1 Tablet App and #1 Trader Community.[11] In 2016, TD Ameritrade finished #2 Overall Broker, with a four and a half star rating. Recognized for the #1 Tablet App, #1 Desktop Platform, #1 Trader Community, and #1 New tool.[12]

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. [13] In 2011, the company settled a related class action lawsuit by agreeing to compensate customers that were victim to identity theft.[14]

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.[15]

Customer losses in Reserve money funds

TD Ameritrade recommended that its customers 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.[16][17][18][19]

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 up to a 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.[20] [21]

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."[16] 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 SEC along with several state regulatory agencies investigated TD Ameritrade's fund promotion and marketing practices.[22][23] The company is named in a class action lawsuit for misrepresentation and marketing of the Reserve Yield Plus fund as a money market fund.[24] 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.[25]

In 2011, the company settled the case and agreed to pay 1.2 cents per each share of the fund that was held by its customers. [26]

Sponsorships

The company owns the naming rights to TD Ameritrade Park Omaha for which it pays an average of $1 million a year.[27]

See also

References

  1. 1 2 3 4 5 6 7 8 TD Ameritrade Holding Corporation 2015 Form 10-K Annual Report
  2. ↑ "AMTD: Profile for TD AMERITRADE HLDG - Yahoo! Finance". Yahoo. Retrieved 2008-04-26.
  3. ↑ "Welcome!". TD Ameritrade. Retrieved 2008-04-26.
  4. ↑ TD-Ameritrade Fact Sheet
  5. ↑ Business Wire (2009-01-08). "TD AMERITRADE to Acquire thinkorswim". Business Wire. Retrieved 2013-06-27.
  6. ↑ "TD Ameritrade: Accolades". TD Ameritrade official web site.
  7. ↑ "2011 Online Broker Review", January 18, 2011.
  8. ↑ "2012 Online Broker Review", February 21, 2012.
  9. ↑ "2013 Online Broker Review", February 19, 2013.
  10. ↑ "2014 Online Broker Review", February 18, 2014.
  11. ↑ "2015 Online Broker Review", February 17, 2015.
  12. ↑ "2016 Online Broker Review", February 16, 2016.
  13. ↑ "TD Ameritrade's 6 million customers hit with security breach". CNet. November 26, 2007.
  14. ↑ "TD Ameritrade settles lawsuit over major breach". SC Magazine. October 10, 2011.
  15. ↑ Pepitone, Julianne (2009-07-20). "TD Ameritrade settles auction-rate securities case for $456M". CNN. Retrieved 2010-05-24.
  16. 1 2 "Fund losses fuel customers' anger; Revenue-sharing deal raises questions of conflict". Chicagotribune.com. Retrieved 2013-06-27.
  17. ↑ Money. Omaha.com (2013-07-02). Retrieved on 2013-07-12.
  18. ↑ Getting Personal:Reserve Payout Won't Deter Suit, Lawyers Say Archived December 11, 2008, at the Wayback Machine.
  19. ↑ "Reserve Yield Plus Investors in SEC Plea". Online.wsj.com. 2009-09-12. Retrieved 2013-06-27.
  20. ↑ "Ameritrade to Make Clients Whole on Primary Fund". Sbk.online.wsj.com. 2008-09-25. Retrieved 2013-06-27.
  21. ↑ "TD Ameritrade Support for Primary and International Fund holders". Tdameritrade.com. Retrieved 2013-06-27.
  22. ↑ Guru, Joe. "TD Ameritrade cons customers into "safe" money funds". Blogs.courant.com. Retrieved 2013-06-27.
  23. ↑ "Form 10K: TD AMERITRADE Holding Corporation". Sec.gov. Retrieved 2013-06-27.
  24. ↑ "Investors feel burned by what looked like a money market fund". tribunedigital-baltimoresun.
  25. ↑ "Investors in fallen money fund Reserve Yield Plus can't access cash". New York Daily News. October 3, 2008.
  26. ↑ "TD Ameritrade Settles SEC Case Over Reserve Fund". Wall Street Journal. February 4, 2011.
  27. ↑ "The Omaha Baseball Stadium Becomes TD AMERITRADE Park Omaha". TD Ameritrade. June 10, 2009.

External links

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