TD Ameritrade

TD Ameritrade Holding Corporation
Public company
Traded as NASDAQ: AMTD
Russell 1000 Component
Industry Finance and Insurance
Founded Omaha, Nebraska (1971)[1]
Headquarters Omaha, Nebraska
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 Increase US$3.327 billion (FY 2016)[1]
Decrease US$$1.318 billion (FY 2016)[1]
Increase US$$842 million (FY 2016)[1]
Total assets Increase US$$28.818 billion (FY 2016)[1]
Total equity Increase US$$5.051 billion (FY 2016)[1]
Owner Toronto-Dominion Bank (42%)[1]
Number of employees
 6,010[1]
Website www.amtd.com
www.tdameritrade.com

TD Ameritrade is a brokerage firm based in Omaha, Nebraska. The letters TD are derived from Toronto-Dominion Bank, the largest shareholder. The company provides services for individuals and institutions that are investing online. The company offers an electronic trading platform for the purchase and sale of financial securities including common stocks, preferred stocks, futures contracts, exchange-traded funds, options, mutual funds, and fixed income investments. It also provides margin lending, and cash management services.

Current operations

As of September 30, 2016, Ameritrade had 6,950,000 funded customer accounts and client assets of $773.8 billion.[1] In fiscal year 2016, the company executed an average of 462,918 client transactions per day.

In fiscal year 2016, the company derived 41.2% of its revenues from commissions and fees including fees for order flow, 27.8% of its revenues from Toronto-Dominion Bank for investment of idle cash balances, 17.9% of revenues from interest, 11.3% from investment product fees, and 1.8% from other sources.[1]

History

In 1975, the Securities and Exchange Commission banned the practice of fixed brokerage commissions and J. Joseph Ricketts and 3 partners opened First Omaha Securities, Inc. in Omaha, Nebraska.[2][3]

In 1983, Ameritrade Clearing Inc. was established as a clearing broker.[2][3]

In 1988, the company introduced the first quote and order entry system via the touch-tone phone.[2][3]

In 1995, the company acquired K. Aufhauser & Company, Inc., the first firm to offer online securities trading.[2][3]

In January 1996, TransTerra's Accutrade launched "Accutrade for Windows," which led to a surge in investing online.[4]

In September 1996, TransTerra merged with Ameritrade.[5]

In March 1997, Ameritrade became a public company via an initial public offering.[2][3]

In February 2001, Ameritrade acquired TradeCast, which had approximately 60 broker/dealer, hedge fund and money management customers.[6]

In July 2001, Ameritrade acquired National Discount Brokers Corporation, adding $6.3 billion in client assets.[7]

In September 2002, Ameritrade merged with Datek Online Holdings Corporation.[8]

In June 2003, Ameritrade purchased Mydiscountbroker.com.[9]

In 2004, Ameritrade completed the purchase of Bidwell and Company in January,[10] BrokerageAmerica in February,[11] and JB Oxford and Company in October.[12]

In January 2006, Ameritrade Holding Corporation acquired TD Waterhouse from Toronto-Dominion Bank and was renamed TD Ameritrade.[13][14][15]

In May 2008, CEO Joe Moglia announced he would be vacating the CEO position and would become Chairman. Fredric Tomczyk, the former COO, was named his successor.[16]

In January 2009, TD Ameritrade acquired Thinkorswim, a producer of software for active traders, in a cash and stock deal valued at approximately $606 million.[17]

In 2013, the company opened a new $250 million headquarters in Omaha.[18]

In October 2016, TD Ameritrade announced the acquisition of Scottrade in a $4 billion transaction.[19][20]

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.[21] In 2011, after being sued in a class action lawsuit, the company settled by agreeing to compensate customers that were victim to identity theft between $50 and $2,500 each.[22] The settlement was criticized for netting the attorneys almost as much money as the victims.[23]

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.[24][25][26]

Customer losses in reserve money funds

TD Ameritrade 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 TD Ameritrade. TD Ameritrade 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 broke the buck and $1 billion in cash equivalents of TD Ameritrade clients were frozen. TD Ameritrade 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 TD Ameritrade, argued that the contract with the Reserve Fund was a standard contract and that "an investment firm has to make money in some way." TD Ameritrade 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, TD Ameritrade agreed to reimburse its customers for up to a 3% loss in the Reserve Primary Fund, or up to $50 million. In 2011, TD Ameritrade 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 on the dollar in addition to compensation from TD Ameritrade.[27][28][29][30][31][32][33][34][35][36]

Sponsorships

The company owns the naming rights to TD Ameritrade Park Omaha for which it pays an average of $1 million a year.[37]

See also

References

  1. 1 2 3 4 5 6 7 8 9 10 11 TD Ameritrade Holding Corporation 2016 Form 10-K Annual Report
  2. 1 2 3 4 5 TD Ameritrade: Our History
  3. 1 2 3 4 5 "Timeline: Milestones in TD Ameritrade history". Omaha World-Herald. October 31, 2016.
  4. ↑ Ken Kamen (September 2, 2010). Reclaim Your Nest Egg: Take Control of Your Financial Future. John Wiley & Sons.
  5. ↑ AMERITRADE HOLDING CORPORATION Form S-1 JANUARY 21, 1997
  6. ↑ "Ameritrade to Add Direct Access With Acquisition of Tradecast" (Press release). Business Wire. February 14, 2001.
  7. ↑ "Ameritrade to Acquire NDB.com" (Press release). Business Wire. July 31, 2001.
  8. ↑ "Ameritrade and Datek Landmark Merger Closes" (Press release). Business Wire. September 9, 2002.
  9. ↑ "Ameritrade Closes on Mydiscountbroker.com Account Acquisition" (Press release). Business Wire. June 16, 2003.
  10. ↑ "Ameritrade Closes on Bidwell & Company Acquisition" (Press release). Business Wire. January 5, 2004.
  11. ↑ "Ameritrade Closes on BrokerageAmerica Account Acquisition" (Press release). Business Wire. February 13, 2004.
  12. ↑ "JB Oxford & Company Completes Sale of Retail Accounts to Ameritrade, Inc." (Press release). PRNewswire. October 12, 2004.
  13. ↑ Ian, Austen (June 23, 2005). "TD Waterhouse USA Is Sold to Ameritrade". New York Times.
  14. ↑ "Ameritrade Closes TD Waterhouse Acquisition". Associated Press. NBC News. January 25, 2006.
  15. ↑ "Ameritrade to Acquire TD Waterhouse U.S.A" (Press release). Business Wire. June 22, 2005.
  16. ↑ "TD Ameritrade names COO Fred Tomczyk as next CEO". Associated Press. Fox News. May 15, 2008.
  17. ↑ "TD AMERITRADE to Acquire thinkorswim" (Press release). Business Wire. January 8, 2009.
  18. ↑ Hubbard, Russell (July 31, 2013). "TD Ameritrade shows off its new $250 million headquarters". Omaha World-Herald.
  19. ↑ WURSTHORN, MICHAEL (October 24, 2016). "TD Ameritrade to Acquire Scottrade Financial". Wall Street Journal.
  20. ↑ "TD Ameritrade to Acquire Scottrade" (Press release). Business Wire. October 24, 2016.
  21. ↑ "TD Ameritrade's 6 million customers hit with security breach". CNet. November 26, 2007.
  22. ↑ Carolina Bolado (September 13, 2011). "TD Ameritrade Settles Data Breach Suit For Up To $6.5M". Law360.
  23. ↑ KRAVETS, DAVID (July 11, 2008). "Ameritrade Hack Settlement: $2 Per Victim, $1.8 Million for Lawyers". Wired.
  24. ↑ Pepitone, Julianne (July 20, 2009). "TD Ameritrade settles auction-rate securities case for $456M". CNNMoney.
  25. ↑ "SEC Charges TD Ameritrade for Auction Rate Securities Sales Practices" (Press release). U.S. Securities and Exchange Commission. July 20, 2009.
  26. ↑ "TD Ameritrade Agrees To Auction-Rate Buyback". Associated Press. New York Times. July 20, 2009.
  27. ↑ HOLZER, JESSICA; MAXEY, DAISY (February 4, 2011). "TD Ameritrade Settles SEC Case Over Reserve Fund". Wall Street Journal.
  28. ↑ TD Ameritrade Announces Reserve Yield Plus Settlement
  29. ↑ Oneal, Michael (November 2, 2008). "Fund losses fuel customers' anger; Revenue-sharing deal raises questions of conflict". Chicago Tribune.
  30. ↑ MAXEY, DAISY (September 12, 2009). "Reserve Yield Plus Investors in SEC Plea". Wall Street Journal.
  31. ↑ ANAND, SHEFALI; SCANNELL, KARA (September 25, 2008). "Ameritrade to Make Clients Whole on Primary Fund". Wall Street Journal.
  32. ↑ AMBROSE, EILEEN (December 16, 2008). "Investors feel burned by what looked like a money market fund". Baltimore Sun.
  33. ↑ "Investors in fallen money fund Reserve Yield Plus can't access cash". Associated Press. New York Daily News. October 3, 2008.
  34. ↑ "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.
  35. ↑ "TD Ameritrade investors in Reserve money fund could share settlement". Associated Press. USA Today. February 3, 2011.
  36. ↑ "FEDERAL COURT APPROVES FINAL DISTRIBUTION OF ASSETS" (PDF) (Press release). Reserve Funds. April 11, 2016.
  37. ↑ "The Omaha Baseball Stadium Becomes TD AMERITRADE Park Omaha". TD Ameritrade. June 10, 2009.
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