TD Ameritrade Pays $456 Million in Auction Rate Deal

TD Ameritrade Pays $456 Million in Auction Rate Deal - 7/20/2009

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SETTLEMENT NEWS:

TD Ameritrade Pays $456 Million in Auction Rate Deal
Karen Freifeld

Bloomberg. July 20, 2009
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EXCERPT: TD Ameritrade Inc. will return $456 million to investors in auction-rate securities under a settlement announced by New York Attorney General Andrew Cuomo. TD Ameritrade joins a group of firms that have agreed with regulators to buy back billions of dollars worth of the illiquid securities, Cuomo said today in a statement. Such settlements have called for more than $61 billion in investor buy backs, said Cuomo, who added that he may sue Charles Schwab & Co. over its marketing and sales of the securities. “TD Ameritrade joins eleven underwriting securities firms and another downstream broker, Fidelity Investments, in resolving allegations that they misrepresented auction-rate securities as liquid, short-term investments,” Cuomo said. Firms including Citigroup Inc., UBS AG and Goldman Sachs Group Inc. last year agreed to repurchase the debt to settle regulatory claims that they improperly touted the investments as safe, cash-like investments. Banks managing auctions abandoned the $330 billion auction-rate market in February 2008, stranding thousands of investors who could no longer sell the securities at periodic biddings. In September, Fidelity Investments, the world’s largest mutual fund manager, became the first retail broker to settle with New York and Massachusetts, agreeing to buy back $300 million in auction rate securities. Buy Backs Kim Hillyer, a spokeswoman for TD Ameritrade, didn’t immediately respond to calls and an e-mail seeking comment. Cuomo said TD Ameritrade agreed to the buy backs from retail investors who bought them before Feb. 13, 2008, within 75 days for account holders with $250,000 or less, or by March 2010 for all other eligible customers.

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