Scottrade

Scottrade

Company type	Private
Industry	Financial services
Founded	1980
Founder	Rodger O. Riney
Defunct	2017
Fate	Brokerage operations acquired by TD Ameritrade; Scottrade Bank acquired by Toronto-Dominion Bank
Headquarters	St. Louis, Missouri , United States
Area served	United States
Key people	Rodger O. Riney (Founder)
Products	Stockbrokerage, electronic trading platform, banking services (Scottrade Bank)
Number of employees	3,700 (2016)

Scottrade was a U.S.-based stockbroker and electronic trading platform that operated through mobile devices, web interfaces, and physical branches. In September 2017, its brokerage operations were acquired by TD Ameritrade (which later merged into Charles Schwab Corporation), while Scottrade Bank was purchased by Toronto-Dominion Bank and integrated into TD Bank, N.A..

History

Established in 1980 by entrepreneur Rodger O. Riney under the name Scottsdale Securities in Scottsdale, Arizona, the firm expanded to St. Louis in 1981 and shifted its headquarters there by 1985. By 1991, Scottrade had developed a network of 15 branches.

The company launched its online presence and electronic trading platform in 1996, which resulted in a consistent monthly growth of 15% in trade volume for over three years. By the year 2000, more than 90% of its trades were conducted online, leading to a rebranding as Scottrade to reflect its web identity. Although revenues declined after the dot-com crash, the company fully rebounded by 2004.

Focusing on diverse customer segments, Scottrade introduced Chinese-language support at retail locations in 2001 and extended this service online by 2003. Between 2000 and 2004, it doubled its retail branch count to 211 and reached a milestone of executing 98% of trades electronically by 2003.

In 2004, Scottrade expanded its corporate facilities near its St. Louis call center. Two years later, it acquired naming rights for the St. Louis Blues’ arena, which was renamed the Scottrade Center in 2006.

Broadening its offerings, the company established Scottrade Bank in 2008 and launched a mobile application in 2009.

By 2016, Scottrade reported revenues of $1.1 billion and employed roughly 3,700 people. Its focus on strategic expansion and technological advancement established it as a notable contender within the financial services sector until its acquisition by TD Ameritrade in 2017.

Misrepresentations

In 2008, the U.S. Securities and Exchange Commission (SEC) charged Scottrade with misleading clients about Nasdaq pre-open orders, violating provisions of the Securities Exchange Act of 1934. The company agreed to an SEC order that included formal censure, cessation of violations, and payment of a $950,000 civil penalty.

Violations of record-keeping requirements

In January 2014, Scottrade acknowledged breaching federal record-keeping regulations during an SEC inquiry into unauthorized transactions tied to a compromised account. Trading records were missing for a period spanning six years. The resolution entailed an admission of wrongdoing along with a $2.5 million penalty.

Database hack

Between late 2013 and early 2014, unauthorized parties accessed an encrypted database containing sensitive personal information of over 4.6 million clients, including confidential account details. The breach was disclosed in October 2015 after federal investigators alerted the company while probing similar incidents. Affected customers were offered identity protection services.

In November 2015, the Financial Industry Regulatory Authority imposed a $2.6 million fine on Scottrade for inadequate safeguarding of financial records and emails, including deletion of more than 168 million outgoing emails containing trading data. While Scottrade neither admitted nor denied these allegations, it consented to FINRA’s findings and paid the imposed fine.