TD Ameritrade

Current operations

As of September 30, 2016, Ameritrade had 6,950,000 funded customer accounts and client assets of $773.8 billion. 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 TD 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.

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.

In 1983, Ameritrade Clearing Inc. was established as a clearing broker.

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., the first firm to offer online securities trading.

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

In September 1996, TransTerra merged with Ameritrade.

In March 1997, Ameritrade became a public company via an initial public offering.

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

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

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

In June 2003, Ameritrade purchased Mydiscountbroker.com.

In 2004, Ameritrade completed the purchase of Bidwell and Company in January, BrokerageAmerica in February, and JB Oxford and Company in October.

In January 2006, Ameritrade Holding Corporation acquired TD Waterhouse from Toronto-Dominion Bank and was renamed TD Ameritrade.

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.

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.

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

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

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. 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. The settlement was criticized for netting the attorneys almost as much money as the victims.

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.

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. 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." The fund gained approximately $1 billion in assets as a result of marketing by TD Ameritrade to its customers. 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.

Sponsorships

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