SEC Charges TD Ameritrade for Failure to Supervise Its Brokers

The SEC has charged TD Ameritrade for failing to supervise its brokers who misled clients who bought shares in the Reserve Yield Plus Fund.

Various brokers at the firm violated securities laws when they misrepresented the mutual fund as a money market fund, with the safety of a cash investment and with guaranteed liquidity. They also failed to disclose the nature or risks of the fund when offering the investment to customers.

The SEC found that TD Ameritrade supervisors failed to prevent the misconduct because it failed to establish adequate supervisory policies and procedures.

In settling the case, TD Ameritrade agreed in a settlement to pay approximately $10 million to eligible customers who continue to hold shares of the fund.

TD Ameritrade’s customers have received approximately 95 percent of their original principal investments in the fund following distribution of most of the fund’s liquidated assets to all of its shareholders.