TD Ameritrade
| Company type | Public (until acquisition) |
|---|---|
| Industry | Financial services, Stockbroker |
| Predecessor | First Omaha Securities |
| Founded | 1975 |
| Founder | Joe Ricketts |
| Fate | Acquired by Charles Schwab Corporation in 2020 |
| Headquarters | Omaha , United States |
Area served | United States, formerly Canada (until 2006) |
Key people | Joe Moglia (Founder, former CEO and Chairman), Fredric Tomczyk (former CEO), Tim Hockey (former CEO) |
| Products | Electronic trading platform for buying and selling financial assets |
| Parent | Charles Schwab Corporation (since 2020) |
TD Ameritrade Holding Corporation operated as a stockbroker offering an electronic trading platform for buying and selling financial assets. Established in 1975 under the name First Omaha Securities by Joe Ricketts, the firm grew through acquisitions and strategic initiatives. In 2006, it purchased the U.S. operations of TD Waterhouse from Toronto-Dominion Bank, subsequently adopting the TD Ameritrade brand. The company was ultimately acquired by Charles Schwab Corporation in 2020.
History
The company was launched in 1975 by Joe Ricketts as First Omaha Securities and expanded its services by creating Ameritrade Clearing Inc. in 1983, which functioned as a central counterparty clearing broker. By 1988, it had introduced a pioneering quote and order entry system that operated through push-button telephone technology.
In March 1997, the firm went public via an initial public offering. The acquisition of TD Waterhouse's U.S. operations from TD Bank Group occurred in 2006, with TD Bank Group acquiring a 39% ownership interest; concurrently, Ameritrade’s Canadian operations were sold to TD Bank and merged with TD Waterhouse Canada.
In January 2009, TD Ameritrade purchased the thinkorswim trading platform for roughly $606 million. A new $250 million headquarters was inaugurated in Omaha in 2013. The company's growth continued with the acquisition of Scottrade’s brokerage division in 2017. In collaboration with Havas in 2018, TD Ameritrade launched the first-ever advertisement embedded on the bitcoin blockchain.
The takeover by Charles Schwab Corporation was finalized in 2020, leading to the full integration and eventual discontinuation of TD Ameritrade’s platform by May 2024 after customer accounts were transitioned.
Management history
In May 2008, CEO Joe Moglia resigned to assume the role of Chairman, with COO Fredric Tomczyk stepping into the CEO position. Tomczyk retired in 2016, succeeded by Tim Hockey as CEO. Hockey stepped down in 2020 amid disputes with the board regarding company expansion strategies. That year also saw Moglia retiring from his Chairman duties.
Acquisition history
| # | Year | Company |
|---|---|---|
| 1 | 1995 | K. Aufhauser & Company, Inc. |
| 2 | 1996 | TransTerra |
| 3 | 2001–02 | TradeCast |
| 4 | 2001 | National Discount Brokers |
| 5 | 2002 | Datek |
| 6 | 2003 | MyDiscountBroker.com |
| 7 | 2004 (Jan) | Bidwell |
| 8 | 2004 (Feb) | BrokerageAmerica |
| 9 | 2004 (Oct) | JB Oxford and Company |
| 10 | 2006 (Jan) | TD Waterhouse U.S. brokerage division |
| 11 | 2008 (Feb) | Fiserv brokerage unit |
| 12 | 2009 (Jan) | Thinkorswim |
| 13 | 2017 (Sep) | Scottrade |
These acquisitions strategically increased TD Ameritrade's market presence and broadened its offerings, strengthening its position within the brokerage sector.
Security breaches
In November 2007, the company revealed a significant data breach compromising much of its clients' personal information, including names, Social Security numbers, birthdates, addresses, phone numbers, and trading records. After a class action lawsuit filed in 2011, affected customers received settlements ranging from $50 to $2,500 each; however, this resolution faced criticism for disproportionately favoring legal representatives. In 2020, reports emerged that customer login details had again been sold on the dark web, underscoring persistent cybersecurity vulnerabilities.
Auction Rate Securities Controversy
In 2009, TD Ameritrade resolved litigation concerning its promotion of auction rate securities as short-term investment options. The resolution included a payment of $456 million and the repurchase of securities to reimburse investors for their losses, highlighting regulatory concerns regarding the firm's sales conduct.
The firm and its registered representatives advised clients to allocate cash reserves into a money market fund linked to the Reserve Primary Fund, which attracted nearly $1 billion in assets through this approach. Additionally, TD Ameritrade marketed an affiliated fund, Reserve Yield Plus, portraying it as a secure money market option, despite it being structured as a bond fund. The company received commissions for directing clients toward these funds.
During the 2008 financial crisis in September 2008, the Reserve Primary Fund "broke the buck" due to investments in Lehman Brothers securities, effectively freezing approximately $1 billion in cash equivalents belonging to TD Ameritrade clients. The Reserve Yield Plus fund also experienced a decline in value. The company was criticized for potential conflict of interest arising from earned commissions, questionable marketing ethics, and misrepresentations regarding investment safety. It became the subject of class action lawsuits, while the U.S. Securities and Exchange Commission initiated an inquiry into its promotional practices.
In 2008, TD Ameritrade committed to compensating customers for losses up to 3% in the Reserve Primary Fund, amounting to a maximum of $50 million. Later, in 2011, it reached a settlement with the SEC by paying $10 million (equivalent to 1.2 cents per share) related to holdings in the Reserve Yield Plus Fund. The Reserve Yield Plus fund completed its final distribution in 2016, returning between 97 and 98 cents per share along with additional compensation from TD Ameritrade.
India
In September 2022, the Reserve Bank of India (RBI) identified TD Ameritrade among 34 foreign exchange trading platforms classified as unauthorized within India.
Sponsorships
TD Ameritrade acquired naming rights for the baseball field known as TD Ameritrade Park Omaha through a contract worth $1 million annually over 20 years beginning in 2011. After being acquired by Charles Schwab Corporation, the naming rights agreement continued, and the venue was renamed Charles Schwab Field Omaha.