TD Ameritrade

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TD Ameritrade

Basic information
Founded	1975
Type	Public
Industry	Financial Services
Official website	https://web.archive.org/web/20250000000000*/http://www.tdameritrade.com/

TD Ameritrade was a US-based company providing brokerage and related financial services. The company underwent an acquisition by Charles Schwab between 2019 and 2020 and completed transition of customer accounts in 2024.

Incidents

Security breaches

In November 2007, the company disclosed that hackers had breached its systems, gaining access to sensitive client information, including names, Social Security numbers, dates of birth, addresses, phone numbers, and trading activity. Following a class-action lawsuit in 2011, the company agreed to a settlement, offering compensation ranging from $50 to $2,500 to customers who fell victim to identity theft as a result of the breach. In 2020, customer login credentials were found being sold on the dark web.

Auction rates securities scandal

In 2009, TD Ameritrade settled a lawsuit that accused the firm of misleading investors by selling them auction-rate securities it touted as safe, short-term investments. The investments, which had been considered safe before the 2008 financial crisis, later became illiquid, making investors' money irretrievable. The firm has agreed to pay $456 million and to buy back all the affected securities at their face value to compensate investors for losses.

Losses in Reserve funds

The company and its advisors recommended the investment of cash holdings in a money market fund affiliated with the Reserve Primary Fund, which gained approximately $1 billion in assets. The company also promoted the Reserve Yield Plus Fund as a safe money market fund, despite it actually being a bond fund. The company received commissions for steering customers toward these funds.

During the 2007–2008 financial crisis, the Reserve Primary Fund suffered heavy losses. In September 2008, it dropped below $1 per share, freezing $1 billion in cash belonging to TD Ameritrade clients. The Reserve Yield Plus Fund also declined in value during this period.

These actions led to class-action lawsuits filed by customers and an investigation by the U.S. Securities and Exchange Commission (SEC) into the company's marketing practices.

In 2008, TD Ameritrade agreed to reimburse customers for up to 3% of their losses in the Reserve Primary Fund, with a total cap of $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 Fund made its final distribution in 2016, with investors receiving 97 to 98 cents per share, in addition to the compensation provided by TD Ameritrade.