As of March 31, 2020, TD Ameritrade had more than 12 million client accounts and client assets of approximately $1.2 trillion. In fiscal 2020 second quarter, the company executed an average of 2.1 million daily average revenue trades per day. In fiscal 2019, the company derived 33.3% of its revenues from commissions and fees including payment for order flow, 28.5% of its revenues from the company's bank deposit account program, 25.5% of revenues from interest, 9.7% from investment product fees, and 3% from other sources.
History
In 1975, the Securities and Exchange Commission banned the practice of fixed brokerage commissions and Joe Ricketts and three partners opened First Omaha Securities, Inc. in Omaha, Nebraska. In 1983, Ameritrade Clearing Inc. was established as a central counterparty clearing broker. In 1988, the company introduced the first quote and order entry system via the push-button telephone. In 1995, the company acquired K. Aufhauser & Company, Inc., the first firm to offer an electronic trading platform. In January 1996, TransTerra's Accutrade launched "Accutrade for Windows", an electronic trading platform. In September 1996, the company merged with TransTerra. In March 1997, the company became a public company via an initial public offering. In February 2001, the company acquired TradeCast, which had approximately 60 broker-dealer, hedge fund and money management customers, for $67.3 million. In July 2001, the company acquired National Discount Brokers for $154 million, adding $6.3 billion in client assets. In September 2002, the company acquired Datek. In June 2003, the company acquired Mydiscountbroker.com. In 2004, the company acquired Bidwell in January, BrokerageAmerica in February, and JB Oxford and Company in October. In January 2006, the company acquired the United States brokerage business branded as TD Waterhouse from Toronto-Dominion Bank. The newly combined company was renamed TD Ameritrade, with the Toronto-Dominion Bank owning 40%. In February 2008, the company acquired accounts from Fiserv. In May 2008, CEO Joe Moglia announced he would be vacating the CEO position and would become Chairman. He was succeeded as CEO by COO Fredric Tomczyk, who was formerly Vice Chair of Corporate Operations at Toronto-Dominion Bank. In January 2009, the company acquired Thinkorswim, a producer of software for active traders, for $606 million in cash and stock. In 2013, the company opened a new $250 million headquarters in Omaha. In 2016, Tomczyk retired as CEO and succeeded by Tim Hockey, who had previously headed the TD Canada Trust retail banking division of Toronto-Dominion Bank. In September 2017, the company acquired Scottrade, based in St Louis, Missouri, making St. Louis the second-largest hub for the company. The transition of client accounts occurred in February 2018. In April 2018, TD Ameritrade and Havas placed the first advertisement inserted within the bitcoinblockchain. In August 2019, CEO Tim Hockey announced his departure from TD Ameritrade in early Q1 2020. In October of 2019, TD Ameritrade reduced most online trades to being commission free. On November 25, 2019, Charles Schwab Corporation announced its intent to acquire TD Ameritrade for approximately USD $26B in stock. Corporate HQ would relocate from Omaha to Texas sometime in 2020. According to Barrons, "Ameritrade stock fell an additional 26% after the commission cut" in October 2019 and "that further stock-price decline opened the door for Schwab to swoop in and buy the without paying an equity premium for the trading revenue that it had helped to wipe out". Toronto-Dominion Bank will have a 13% ownership stake in the newly combined company.
Legal actions
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, 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.
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.
The company recommended to its customers to invest cash holdings in a money market fund that was an affiliate of the Reserve Primary Fund and the fund gained approximately $1 billion in assets as a result of such marketing by the company. The company 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 was forced to break the buck and $1 billion in cash equivalents of TD Ameritrade clients were frozen. The company 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 the company, 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 company 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, the company agreed to reimburse its customers for up to a 3% loss in the Reserve Primary Fund, or up to $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 made its final distribution in 2016 and investors received 97 to 98 cents per share 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.
