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Class action says TD Ameritrade violated Securities Exchange Act

By Legal News Line | Dec 5, 2014

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TRENTON, N.J. (Legal Newsline) - A class action alleging online broker TD Ameritrade routed orders in a manner that maximized liquidity rebates for the company rather than optimized execution for clients was recently filed in New Jersey.

The suit is seeking to recover damages on behalf of all retail clients of TD Ameritrade during the class period beginning in September 2011.

Filed on Sept. 15 by Katrina Carroll and Joseph DePalma of Lite DePalma Greenberg on behalf of New Jersey resident Gerald J. Klein, the lawsuit also names TD Ameritrade CEO Fredric Tomczyk as a defendant. It claims that TD Ameritrade violated the Securities Exchange Act by making false or misleading statements about the manner in which it routes clients’ orders to buy and sell securities.

Recently, Lite DePalma Greenberg was named liaison counsel, while Kwok Shum and Roderick Ford have been lead plaintiffs.

The firm Levi & Korsinsky will serve as lead counsel.

Beginning in 2011, the suit alleges TD Ameritrade modified its routing methods to send orders to venues that would maximize rebates. By the end of 2012, the suit further alleges, all non-marketable limit orders were directed to Direct Edge, which offered the highest rebate for adding liquidity, rather than to the venue that would provide the best execution.

This resulted in an economic loss for clients, the suit alleges.

The filing said TD Ameritrade earned routing revenue of $185 million in 2011, $184 million in 2012 and $236 million in 2013.

U.S. District Court for the District of New Jersey case number 8:14-cv-00396.


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