Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Monday, July 20, 2009

TD Ameritrade Latest Firm to Settle ARS Charges with Regulators

The SEC, NASAA and the New York AG each separately announced a settlement with TD Ameritrade regarding auction-rate securities (ARS).  Similar to other ARS settlements, the firm agrees to purchase illiquid ARS from individuals, charities, non-profits and small businesses and institutions purchased from TD Ameritrade before February 13, 2008 (collectively “retail investors”). TD Ameritrade will purchase the ARS from retail investors with accounts of $250,000 or less within seventy-five (75) days; by March, 2010, for all other eligible TD Ameritrade customers. TD Ameritrade will also fully reimburse all eligible investors who sold their auction-rate securities at a discount after the market failed and consent to a special arbitration procedure to resolve claims of consequential damages suffered by eligible investors as a result of not being able to access their funds.

In the same announcement, the New York AG also announced "imminent legal action" against Charles Schwab & Co. (“Schwab”) for deceptively selling auction-rate securities as safe, liquid, short-term investments.


 

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