TD Ameritrade: Difference between revisions

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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.<ref>https://money.cnn.com/2009/07/20/news/companies/Schwab_TD_securities_investigation/index.htm</ref><ref>https://www.sec.gov/news/press/2009/2009-163.htm</ref><ref>https://www.nytimes.com/2009/07/21/business/21auction.html</ref>

=== Losses in Reserve funds ===

===Losses in Reserve funds===

The company and its advisors recommended the investment of cash holdings in a [[wikipedia:Money_market_fund|money market fund]] affiliated with the [[wikipedia:Reserve_Primary_Fund|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 [[wikipedia:Reserve_Primary_Fund|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 [[wikipedia:U.S._Securities_and_Exchange_Commission|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.<ref>https://www.chicagotribune.com/news/ct-xpm-2008-11-02-0810310465-story.html</ref><ref>https://www.baltimoresun.com/news/bs-xpm-2008-12-16-0812150177-story.html</ref><ref>https://www.sec.gov/news/press/2011/2011-36.htm</ref><ref>https://www.cbsnews.com/news/sec-announces-10m-settlement-with-td-ameritrade/</ref><ref>https://www.primary-yieldplus-inliquidation.com/lander</ref>

==References==

@@ Line 12: / Line 12: @@
 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.<ref>https://money.cnn.com/2009/07/20/news/companies/Schwab_TD_securities_investigation/index.htm</ref><ref>https://www.sec.gov/news/press/2009/2009-163.htm</ref><ref>https://www.nytimes.com/2009/07/21/business/21auction.html</ref>
-=== Losses in Reserve funds ===
+===Losses in Reserve funds===
+The company and its advisors recommended the investment of cash holdings in a [[wikipedia:Money_market_fund|money market fund]] affiliated with the [[wikipedia:Reserve_Primary_Fund|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 [[wikipedia:Reserve_Primary_Fund|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 [[wikipedia:U.S._Securities_and_Exchange_Commission|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.<ref>https://www.chicagotribune.com/news/ct-xpm-2008-11-02-0810310465-story.html</ref><ref>https://www.baltimoresun.com/news/bs-xpm-2008-12-16-0812150177-story.html</ref><ref>https://www.sec.gov/news/press/2011/2011-36.htm</ref><ref>https://www.cbsnews.com/news/sec-announces-10m-settlement-with-td-ameritrade/</ref><ref>https://www.primary-yieldplus-inliquidation.com/lander</ref>
 ==References==