Pennsylvania regulators have filed civil complaints against TD Ameritrade over its sale of the Reserve Yield Plus fund and auction-rate securities to investors across the nation.
Reserve allegedly characterized Reserve Yield Plus as a cash-enhanced product, not the money market fund that TD Ameritrade brokers told investors it was on recorded telephone calls, starting in December 2006. The Pennsylvania Securities Commission complaint also says the brokerage firm continued to sell the fund even after it broke the buck in November 2007, under senior management executives' orders to sell it "strategically" to certain customers.
Yield Plus, once topping $1.2 billion, now has about $39.7 million remaining to cover legal costs, having distributed about 94.8% of its assets to investors.
In a related suit, Pennsylvania has ordered TD Ameritrade to repurchase $26.5 million in auction-rate securities held by state residents. This suit, announced July 20, says: "The Pennsylvania commission led a 12-state task force of state securities regulators formed through the North American Securities Administrators Association (NASAA) in investigating TD Ameritrade's marketing and sales of ARS. TD Ameritrade investors nationwide currently hold approximately $420 million of auction rate securities in their accounts and will also receive offers for repurchase of their ARS securities."
PSC Chairman Robert Lam said: ""The Pennsylvania Securities Commission has received many calls from Pennsylvanians and hundreds of calls from investors from around the nation concerning TD Ameritrade. They need their money to make medical payments, run their businesses, or retire as planned. I am pleased that the uncertainty and worry will be over and that these investors will soon get their money back."