OMAHA, Neb. (AP) — TD Ameritrade has agreed to a $10 million settlement for failing to properly supervise representatives who misled investors about the safety of the mutual fund that “broke the buck” in 2008, the Securities and Exchange Commission said Thursday.
TD Ameritrade Holding Corp. customers who still hold shares of Reserve Management Corp.’s Yield Plus Fund should receive 1.2 cents per share within 30 days as part of the settlement.
The SEC said Ameritrade representatives failed to disclose the risks of the Yield Plus Fund and some representatives told investors the fund was as safe as cash. The Yield Plus Fund “broke the buck” in September 2008 when the value of its assets fell below the level needed to cover every dollar invested in the fund.
“It is critical that customers get accurate information about investment products, and broker-dealers must provide the training and supervision that enables their representatives to deliver this important guidance,” said Julie Lutz, associate director of the SEC’s Denver office. “TD Ameritrade failed to establish the policies and procedures necessary to reasonably supervise its employees and prevent these misrepresentations to investors.”
TD Ameritrade did not admit wrongdoing in the settlement. TD Ameritrade issued a three-paragraph statement Thursday about the settlement, but representatives did not immediately respond to questions about the settlement.
Representatives of the Omaha-based company did not immediately respond Thursday to questions about the settlement.
TD Ameritrade shares fell 22 cents, or 1 percent, to $20.50 in afternoon trading following the SEC announcement.
The SEC said that thousands of TD Ameritrade customers continue to hold the majority of the Yield Plus Funds shares. Those people received about 95 percent of their original investments back after the fund liquidated its assets.
The problems in several of Reserve’s mutual funds during the financial crisis led institutional investors to pull out cash and created fears about the safety of the $3.4 trillion in assets held in money-market funds. That sell-off prompted the federal government to announce a temporary program to guarantee money funds, should one of them break the buck again.
In the fall of 2008, Ameritrade said it would spend up to $55 million to help cover losses its customers suffered while investing in two troubled money market mutual funds: Reserve Management Corp.’s Primary Fund and The International Liquidity Fund.
It was not immediately clear Thursday why that earlier voluntary reimbursement program didn’t cover the Yield Plus losses addressed in the SEC settlement.
Josh Funk, AP Business Writer, On Thursday February 3, 2011, 3:02 pm
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Jim has worked as a Portfolio Manager & Financial Advisor since 1996. In May 2005, Jim founded WHI Financial Services, LLC, WHIFinancial.com, a Registered Investment Advisory firm, with headquarters in Texas. His primary focus is on portfolio management, financial & retirement planning, and financial advisory & insurance services. Jim manages investment portfolios & advises individuals, small to mid-size companies, and non-profit organizations on a variety of financial and business issues.
Prior to founding WHI Financial Services, LLC, Jim worked as a portfolio manager & financial advisor for two international investment firms. From 2001 to 2005, Jim worked with Prudential Securities (merger with Wachovia Securities, now Wells Fargo Financial Advisors), and from 1996 to 2001, he was working with Merrill Lynch. While working with both Wachovia Securities and Merrill Lynch, Jim enjoyed dual responsibilities as a portfolio manager, financial advisor and leader of the Professional Development Program.
Jim's responsibilities as leader of the Professional Development Program included, recruiting, interviewing, training, and overseeing the daily operations of all financial advisors involved in the Professional Development Program. Jim was responsible for managing between 10-20 advisors, while still managing his own client investment accounts.
In addition to his experience in the financial services area, Jim has been involved in several start-up companies. Jim's Philanthropic work includes serving as President/Treasurer of a private foundation established to provide non-profit organizations financial assistance, and Chairman/President of the Believe In Your Dreams Foundation. In 2007, Jim established the Believe In Your Dreams Foundation, a 501(c)3 organization, to help individuals who are suffering from life-altering circumstances beyond their control.
Jim has taught investment, insurance, and credit repair classes through continuing education at universities in CA & TX since 1997. Jim attended the University of Minnesota where his focus was Management & Marketing.
Jim has recently written two books, one called "Your Financial Lifecycle" a book which describes several key investment topics everyone will face throughout their life, and a book titled, "The Truth about Your Credit Score", which defines how credit scores are calculated and how you can increase your credit score, including templates which you can use to send to creditors.
Jim's books can be purchased on Amazon.com, via Author search, or by emailing him directly at JimWigen@GetWealthyStayWealthy.com.
In the Fall of 2011, Jim will be starting his radio show called, The Jim Wigen Show, Teaching You to Get Wealthy & Stay Wealthy. You can hear his shows through streaming audio by visiting JimWigen.com.
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