The proposed settlement of a class-action antitrust lawsuit over Charles Schwab’s TD Ameritrade acquisition is drawing objections from some customers, who complain the agreement would enrich attorneys at their expense.
The settlement calls for Schwab to make certain non-monetary moves, including implementing an antitrust compliance program, and pay plaintiffs’ attorneys’ fees and costs.
“This settlement seems primarily structured to enrich the attorneys rather than provide meaningful redress to the affected individuals,” class member Craig Matson told the court in a recent letter objecting to the agreement. Furthermore, he added, Schwab clients would indirectly bear the costs for the significant legal fees in the case.
“They may manifest as potentially higher fees for services, reduced investment in platform improvements, lower returns for shareholders, or diminished overall value derived from our relationship with the corporation. In essence, the class members are indirectly funding the attorneys' fees for a settlement that provides them little to no tangible advantage,” Matson wrote.
The attorneys fees proposed in the settlement appear “grossly disproportionate” to the "negligible" benefit for class members, Matson said, asking the court to reject the agreement in its current form.
Class members in the federal antitrust suit have until July 29 to object to the settlement in writing, and may include a request for court permission to speak at an Aug. 28 fairness hearing in Texas, according to the settlement website. The plaintiffs have until Thursday to submit a motion in U.S. District Court for the Eastern District of Texas for final settlement approval.
In February, the court issued a preliminary order approving the settlement between Schwab and brokerage customers who alleged that Schwab's acquisition of TD Ameritrade decreased competition among brokers.
Schwab acquired TD Ameritrade in 2020 for about $22 billion. Integration took years; Ameritrade's platforms were shut down for good in 2024.
“As one of the class of people suffering damages I object because the settlement does not benefit me at all, while adding to the costs and distracting the management attention of a company that I rely on for my financial well-being,” Anthony Capowski, another class member, wrote.
“Schwab will now have millions of dollars of additional expense that will drive up their cost of doing business and may end up harming me by making my costs higher as they try to recoup those expenses,” he said.
Bernard J. Duffy, another class member, offered similar arguments.
“The proposed settlement fails to deliver any meaningful injunctive or monetary relief to class members like myself. The claimed injunctive benefit is vague, unenforceable, and does not materially change Schwab’s practices in a way that provides me with tangible value,” Duffy wrote. “At the same time, the settlement imposes added operational complexity and cost on the brokerage, costs that may ultimately be passed on to customers.
“The structure of this settlement is ineffective at remedying the alleged harm. It offers no direct compensation to me as a class member, despite the alleged anti-competitive impact on my trades. I consider this settlement fundamentally unfair and inadequate,” Duffy said.
The plaintiffs’ motion filed in February seeking preliminary court approval for the settlement said their lawyers would seek up to $8.25 million in attorney’s fees, $700,000 in litigation expenses and $5,000 in service awards for named, or representative, plaintiffs.
More than 25.5 million settlement class members were to be notified by email or physical mail, according to a joint status report filed with the court in April.
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