Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor
TD Ameritrade sign

Industry Spotlight > Clearing and Custodial Firms

TD Ameritrade Clearing Hit With $500K Fine

By Melanie Waddell

X
Your article was successfully shared with the contacts you provided.

TD Ameritrade Clearing was hit with a $500,000 fine by the Financial Industry Regulatory Authority for failing to disclose information about callable securities — including the sale of exchange traded notes.

According to the order, between January 2016 and June 2021, TDAC “sent its customers confirmations for approximately 9.8 million transactions that omitted required disclosures regarding its customers’ purchases” of exchange traded notes (ETNs) and preferred securities.

In particular, the confirmations “failed to disclose that the securities were callable and, with regard to the ETNs, that early redemption could affect the securities’ yield,” the order states.

As a result, TDAC violated Exchange Act Rule 10b-10(a)(4), promulgated under Section l0(b) of the Securities Exchange Act of 1934, and FINRA Rules 2232 and 2010.

TDAC relied instead “upon general language within the confirmations it sent to customers that disclosed that ‘[i]f the transaction involves callable securities, the call features could affect yield,’” the FINRA order states. “Complete information will be provided upon request.”

As a result, “the confirmations did not disclose that the ETNs and preferred securities in question were in fact callable, and with respect to the ETNs purchased by the firm’s customers, that early redemption could affect the securities’ yields,” the order explains.

In February 2021, TDAC “self-reported the above-described failures to FINRA and voluntarily employed corrective action, including notifying its customers that the securities in question were callable, and with respect to the ETNs purchased by the firm’s customers, that early redemption could affect the securities’ yields,” FINRA said.

Melanie Waddell

@Think_MelanieW

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.