September 7, 2011

The SEC Announced $10 mill settlement with TD Ameritrade

 Josh Funk, a business writer for the AP wrote that  TD Ameritrade has agreed to a $10 million settlement for failing to properly supervise representatives who misled investors about the safety of a money-market mutual fund that "broke the buck" in 2008, the Securities and Exchange Commission said.

Funk writes that TD Ameritrade Holding Corp. customers who still hold shares of Reserve Management Corp.'s Yield Plus Fund should receive 1.2 cents per share as part of the settlement.

The AP article goes on to say that the SEC said Ameritrade representatives failed to disclose the risks of the Yield Plus Fund and some representatives told investors the fund was as safe as cash even though it wasn't guaranteed like a money-market fund. The Yield Plus Fund "broke the buck" in September 2008 when the value of its assets fell below the level needed to cover every dollar invested in the fund.

"It is critical that customers get accurate information about investment products, and broker-dealers must provide the training and supervision that enables their representatives to deliver this important guidance," said Julie Lutz, associate director of the SEC's Denver office. "TD Ameritrade failed to establish the policies and procedures necessary to reasonably supervise its employees and prevent these misrepresentations to investors."

It was noted in the AP article that TD Ameritrade did not admit wrongdoing in the settlement. TD Ameritrade issued a three-paragraph statement about the settlement, but representatives of the Omaha-based company did not respond to questions about the settlement.

SEC said that thousands of TD Ameritrade customers continue to hold the majority of the Yield Plus Funds shares. Those people received about 95 percent of their original investments back after the fund liquidated its assets.

Funk adds that the problems in several of Reserve's money-market mutual funds during the financial crisis led institutional investors to pull out cash and created fears about the safety of the $3.4 trillion in assets held in money-market funds. That sell-off prompted the federal government to announce a temporary program to guarantee money funds, should one of them break the buck again.

In the fall of 2008, Ameritrade said it would spend up to $55 million to help cover losses its customers suffered while investing in two troubled money-market mutual funds: Reserve Management Corp.'s Primary Fund and The International Liquidity Fund.

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member feel you have become a victim of stock/securities loss, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses.  To speak with an attorney, call 888-760-6552, or visit

Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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