TD Ameritrade 300

Is TD Ameritrade Safe and Legitimate Brokerage Firm? Is TD Ameritrade a Scam? Are Your Money, IRA Account, and Investments Insured?



Is TD Ameritrade a Scam?


Are you thinking about opening a brokerage account at TD Ameritrade? Do you have questions about this company’s safety and legitimacy? Keep reading. We’ve done a lot of research for you, and we have the answers you need.


Ownership of TD Ameritrade


TD Ameritrade is a publicly-traded company (under the ticker symbol AMTD on the Nasdaq). As such, it is owned by many shareholders; and anyone, including you, could be an owner.

The biggest shareholder in AMTD is Toronto-Dominion Bank, from which the broker’s name is derived. The bank holds about 43% of the outstanding shares. This translates into a lot of control for TD Bank.


History


First Omaha Securities, Inc. was founded in 1975. In 1997, the broker filed for an IPO under the name Ameritrade Holding Corporation; and in 2006, the company was renamed TD Ameritrade after the acquisition of TD Waterhouse.

In 2007, the company’s computer servers were hacked by an outside source and client information was stolen. In 2017, TD Ameritrade acquired Scottrade. Today, TD Ameritrade is one of the largest broker-dealers in the United States.


Size


TD Ameritrade has over $1,000,000,000,000 in client assets. That’s one trillion dollars. This huge treasure chest is built from over 11 million accounts. The brokerage firm also works with 6,000+ independent investment advisors. This very large client base results in half a million trades every market day.

Despite the very impressive numbers, TD Ameritrade isn’t the largest brokerage house in the United States. It is surpassed by Charles Schwab and Vanguard, and dwarfed by Fidelity (who has over $7 trillion in client assets). TD Ameritrade is larger than Edward Jones, E*Trade, and Raymond James.


Is TD Ameritrade Legitimate?


TD Ameritrade is overseen by multiple government agencies. The first is the Securities and Exchange Commission (SEC). TD Ameritrade’s SEC registration numbers are 801-60469 and 8-23395. TDA is registered with the government watchdog in all 50 U.S. states, the District of Columbia, the Virgin Islands, and Puerto Rico.

TD Ameritrade is a member of the Financial Industry Regulatory Authority, also known as FINRA. This organization is a private corporation mandated by Congress. FINRA’s job is to ensure brokerage firms and exchanges adhere to detailed rules for the securities industry. TD Ameritrade’s FINRA ID is 7870.

On FINRA’s BrokerCheck website, we found 190 disclosures of events stretching back to 1979. These are regulatory actions against the brokerage company for a variety of issues. Some examples include failing to properly supervise employees in the state of Massachusetts, routing 100% of orders to an affiliated broker-dealer, and delivering incorrect transaction records to customers. Typically, brokers don’t admit or deny such allegations, but instead pay fines to settle them.

Although TD Ameritrade does have a large number of disclosures, all brokers with any length of history do have them. The fact that TD Ameritrade has settled cases with customers and regulatory bodies does not mean it is a scam.


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Is TD Ameritrade SIPC/FDIC Insured?


All brokerage accounts with TD Ameritrade are protected by the Securities Investor Protection Corporation. The SIPC was established by the U.S. government; but today it’s a private enterprise funded by member brokerage firms.

Per account, the guarantee is $500,000. Half of this amount can be used for cash balances.


Is TD Ameritrade Legit?


Supplemental Insurance


The few account holders who have more than $500,000 in assets are further covered by a supplemental policy TD Ameritrade has through London insurers. This auxiliary policy is good for up to $149.5 million per account (with $2 million available for cash balances). The insurance policy has a maximum brokerage house coverage of $500 million.


TD Ameritrade Better Business Bureau


TD Ameritrade has a profile at the Better Business Bureau. The brokerage firm isn’t BBB accredited. Businesses must apply for BBB accreditation, and most likely TDA hasn’t applied for it.

BBB rates TD Ameritrade with a grade of A-. The highest rating is A+. Issues that the Better Business Bureau looks at when grading a company include the size of the company, the amount of time in business, how transparent it is, and any government actions taken against the firm.

BBB cites three complaints that were filed against TD Ameritrade that the broker didn’t respond to as justification for a grade lower than A+.


Verdict: is TD Ameritrade Scam?


TD Ameritrade definitely is not a scam. It is one of the larger brokerage firms in the United States with a fairly lengthy history of servings its customers. With government oversight and two insurance policies, investors can open accounts with assurance that the broker-dealer is as safe as any other.


Recommendations


TD Ameritrade is a great brokerage firm for active stock, option, ETF, and forex traders who need the best software at the lowest possible trading costs. We can also recommend the broker for financial planning and managed account services, IRA’s, mutual fund investing, and cash management needs.


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