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Ameritrade to Buy JB Oxford's Discount Brokerage Business

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BEVERLY HILLS, Calif. (–Ameritrade Holding Corp. subsidiary Ameritrade Inc. said Monday it plans to buy the online retail account business of JB Oxford Holdings Inc.

The deal is expected to be complete this summer, pending approval from regulators and JB Oxford Holdings shareholders, according to a news release from Ameritrade Holding Corp. The final purchase price will not exceed US$26 million.

JB Oxford is one of a number of broker-dealers caught up in various late trading and market-timing probes related to hedge fund Canary Capital Partners LLC, Secaucus, N.J. New York Attorney General Eliot Spitzer, in his original complaint against Canary, mentioned that in August 2002, Canary reached out to JB Oxford as it increased the number of broker-dealers with whom it had late trading arrangements.

The business part of the business set to be acquired by Ameritrade is separate from the broker-dealer and clearing functions subject to the late trading probes, Ameritrade spokeswoman Katrina Becker said.

JB Oxford was not named as a defendant in the complaint against Canary, and Mr. Spitzer’s office has not filed separate charges against the firm.

According to the complaint, Canary and JB Oxford entered into an agreement that allowed Canary to send a list of proposed mutual fund trades to JB Oxford before 4:15 p.m. ET, 15 minutes after U.S. securities markets close. Canary then had until 4:45 p.m. ET to confirm which of the proposed trades it wanted JB Oxford to make. Those trades would be made at prices set as of the 4 p.m. market close. This allegedly allowed Canary to take advantage of post-market close news that would affect securities prices when markets opened at 9:30 a.m. ET the next day.

In an April 29 regulatory filing, JB Oxford acknowledged probes by Mr. Spitzer’s office, the SEC and the U.S. Attorney’s Office for the Central District of California. In that same filing, company officials said they believed they were cooperating with separate actions by the SEC against JB Oxford and its clearing subsidiary, National Clearing Corp. They also admitted no wrongdoing and said they would “vigorously defend” the company.

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