Scottrade

Last updated
Scottrade
FormerlyScottsdale Securities
Industry Financial services
Founded1980;43 years ago (1980)
DefunctSeptember 18, 2017;5 years ago (2017-09-18)
FateAcquired by TD Ameritrade [1] [2] (later merged into Schwab) [3] [4]
Successor Charles Schwab Corporation [3] [4] (through TD Ameritrade) [1] [2]
Headquarters St. Louis, Missouri
Key people
 Rodger O. Riney (CEO)
Services Stockbroker
Electronic trading platform
Personal banking
Revenue$1.1 billion (2016)
Owner Charles Schwab Corporation [3] [4]
Number of employees
3,700 (2016)
Parent TD Ameritrade [1] [2]
Footnotes /references
[5]
Exterior of the Scottrade Center, now called the Enterprise Center Scottrade Center 3Apr2005.jpg
Exterior of the Scottrade Center, now called the Enterprise Center
A now-shuttered Scottrade office in Canton Charter Township, Michigan Scottrade office Canton Michigan.JPG
A now-shuttered Scottrade office in Canton Charter Township, Michigan

Scottrade was a stockbroker and electronic trading platform that operated via mobile, on the web, and at branches. In September 2017, the company was acquired by TD Ameritrade and TD Bank Group, and all Scottrade brokerage accounts were automatically transitioned and converted to TD Ameritrade accounts; the checking and savings accounts that were offered through Scottrade Bank were folded into TD Bank, N.A., the American subsidiary of TD Bank Group. [6] [1] [2]

Contents

In October 2020, TD Ameritrade was subsequently acquired by brokerage firm Charles Schwab Corporation. This merger would occur three years and one month later, with plans to convert all TD Ameritrade investment accounts and services to Schwab by the year 2023; including former legacy Scottrade brokerage accounts. [3] [4]

History

In 1980, Rodger O. Riney founded Scottsdale Securities as a retail stockbroker in Scottsdale, Arizona. [2] [7] In 1981, Riney moved to St. Louis and opened a second branch. [8] [2]

In 1985, the company moved its headquarters to St. Louis. [2]

By 1989, the company had 6 branches, and by 1991, the company had 15 branches. [2]

In 1996, the company launched its website and electronic trading platform. The number of trades increased by 15% per month, compounded monthly, for 39 months. [7]

By 2000, more than 90% of the company's trades were initiated online. The name of the company was changed to Scottrade because the domain Scottrade.com was available. [2] [7] [8]

For 2 years after the dot-com bubble burst in 2000, revenue declined, although it fully recovered by 2004. [8]

The company began offering Chinese-language services in its retail locations in 2001 and in 2003 made its online offerings available in Chinese. [9]

Between 2000 and 2004, the company doubled the number of retail branch locations, reaching 211 in 2004. [8]

By 2003, 98% of trades executed by the company were made online. [8]

In 2004, Scottrade bought an office building outside of St. Louis next to its call center to use as its corporate offices. [8]

In 2006, Scottrade purchased the naming rights for the stadium of the St. Louis Blues, which was renamed the Scottrade Center (now the Enterprise Center). The Scottrade Center naming rights was negotiated and managed by Scottrade CMO Chris Moloney which was cited by the American Business Journals as "possibly the fastest naming rights negotiation ever." [10]

In 2008, the company launched Scottrade Bank. The St. Louis Business Journal said Scottrade had experienced "rapid growth" with aggressive online marketing. Nielson rated Scottrade as the #1 online advertiser in 2008 by media weight. [2]

In 2009, the company launched a mobile app. [2]

In September 2017, the stock brokerage division of the company was acquired by TD Ameritrade and absorbed by that company; the banking division, Scottrade Bank, was acquired by TD Bank Group and folded into their American subsidiary. [1] [6] [2]

In October 2020, TD Ameritrade was subsequently acquired by stockbroker Charles Schwab Corporation; with plans to convert all TD Ameritrade accounts and services to Schwab by the year 2023, including former legacy Scottrade brokerage accounts. This acquisition would occur three years and one month after TD Ameritrade folded Scottrade’s primary brokerage business into its own platform, thus deeply expanding Schwab’s client base and assets. [3] [4]

Controversies

Misrepresentations

In 2008, the U.S. Securities and Exchange Commission (SEC) charged the company with making fraudulent misrepresentations to clients about Nasdaq pre-open orders in violation of the Securities Exchange Act of 1934. The company consented to the entry of an order by the SEC that included a censure of Scottrade. The company also agreed to stop committing or causing any violations of the act, and paid a civil penalty of $950,000. [11]

Violations of record-keeping requirements

In January 2014, the company admitted to violating the record keeping requirements of federal security laws. The U.S. Securities and Exchange Commission submitted a request for data describing its trades as part of an investigation into whether an account had been hacked and unauthorized trades made for a customer. Every brokerage firm is required to keep trading records under the law. The company was missing data over a six-year period. As part of the settlement, the company agreed to admit fault and pay a fine of $2.5 million. [12]

Database hack

In October 2015, Scottrade revealed that, in late 2013 and early 2014, hackers accessed an encrypted database containing the personal records of more than 4.6 million clients, including names, street addresses, email addresses, social security numbers, and other sensitive account data. [13] The company became aware of the breach when it was approached by Federal authorities who were investigating similar thefts at other financial service companies. [14] As a precaution, Scottrade offered identity protection services to all affected customers. [14] [15]

In November 2015, after performing its own investigation of the breach, the Financial Industry Regulatory Authority fined Scottrade $2.6 million for failing to store financial records and emails completely and securely and for failing to have an organized process for doing so. The company had deleted and failed to save over 168 million outgoing emails with trading information. Scottrade did not admit to or deny these charges, but consented to an entry of FINRA's findings and agreed to pay the fine. [16]

Related Research Articles

Investment banking pertains to certain activities of a financial services company or a corporate division that consist in advisory-based financial transactions on behalf of individuals, corporations, and governments. Traditionally associated with corporate finance, such a bank might assist in raising financial capital by underwriting or acting as the client's agent in the issuance of debt or equity securities. An investment bank may also assist companies involved in mergers and acquisitions (M&A) and provide ancillary services such as market making, trading of derivatives and equity securities, FICC services or research. Most investment banks maintain prime brokerage and asset management departments in conjunction with their investment research businesses. As an industry, it is broken up into the Bulge Bracket, Middle Market, and boutique market.

<span class="mw-page-title-main">Toronto-Dominion Bank</span> Canadian bank and financial services corporation

Toronto-Dominion Bank, doing business as TD Bank Group, is a Canadian multinational banking and financial services corporation headquartered in Toronto, Ontario. The bank was created on February 1, 1955, through the merger of the Bank of Toronto and The Dominion Bank, which were founded in 1855 and 1869; respectively. It is one of two Big Five banks of Canada founded in Toronto, the other being the Canadian Imperial Bank of Commerce. The TD Bank SWIFT code is TDOMCATTTOR and the TD institution number is 004.

In financial services, a broker-dealer is a natural person, company or other organization that engages in the business of trading securities for its own account or on behalf of its customers. Broker-dealers are at the heart of the securities and derivatives trading process.

<span class="mw-page-title-main">Financial services</span> Economic service provided by the finance industry

Financial services are economic services provided by the finance industry, which together encompass a broad range of service sector firms that provide financial management, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, consumer-finance companies, stock brokerages, investment funds, individual asset managers, and some government-sponsored enterprises.

<span class="mw-page-title-main">TD Waterhouse</span> Canadian financial services corporation headquartered in Toronto

TD Waterhouse Canada Inc. is a Canadian financial services corporation headquartered in Toronto, Ontario, that is a wholly owned subsidiary of Toronto-Dominion Bank. The company does business through several divisions, TD Direct Investing, TD Wealth Financial Planning, and TD Wealth Private Investment Advice. The TD Waterhouse brand was also formerly used for TD's American and British brokerages.

<span class="mw-page-title-main">Charles Schwab Corporation</span> American financial services company

The Charles Schwab Corporation is an American multinational financial services company. It offers banking, commercial banking, investing and related services including consulting, and wealth management advisory services to both retail and institutional clients. It has over 400 branches, primarily in financial centers in the United States and the United Kingdom. It ranks tenth on the list of largest banks in the United States by assets. As of December 31, 2022, it had $7.05 trillion in client assets, 33.8 million active brokerage accounts, 2.4 million corporate retirement plan participants, and 1.7 million banking accounts. It also offers a donor advised fund for clients seeking to donate securities. It was founded in San Francisco, California, and is headquartered in Westlake, Texas.

<span class="mw-page-title-main">E-Trade</span> American financial services company

E-Trade Financial Corporation, a subsidiary of Morgan Stanley, offers an electronic trading platform to trade financial assets. The company receives revenue from interest income on margin balances, commissions for order execution, payment for order flow, and management services.

Dean Witter Reynolds was an American stock brokerage and securities firm catering to a variety of clients. Prior to the company's acquisition, it was among the largest firms in the securities industry with over 9,000 account executives and was among the largest members of the New York Stock Exchange. The company served over 3.2 million clients primarily in the U.S. Dean Witter provided debt and equity underwriting and brokerage as mutual funds and other saving and investment products for individual investors. The company's asset management arm, Dean Witter InterCapital, with total assets of $90.0 billion prior to the acquisition, was one of the largest asset management operations in the U.S.

Raymond James Financial, Inc. is an American multinational independent investment bank and financial services company providing financial services to individuals, corporations, and municipalities through its subsidiary companies that engage primarily in investment and financial planning, in addition to investment banking and asset management. Headquartered in St. Petersburg, Florida, Raymond James is one of the largest banking institutions in the United States.

<span class="mw-page-title-main">Thinkorswim</span> Electronic trading platform

Thinkorswim by TD Ameritrade is an electronic trading platform by TD Ameritrade used to trade financial assets. It is geared for self-directed stock, options and futures traders. It was previously offered by ThinkorSwim Group, Inc., which was purchased by TD Ameritrade in 2009.

<span class="mw-page-title-main">Ameriprise Financial</span> Financial services company

Ameriprise Financial, Inc. is a diversified financial services company and bank holding company incorporated in Delaware and headquartered in Minneapolis, Minnesota. It provides financial planning products and services, including wealth management, asset management, insurance, annuities, and estate planning.

<span class="mw-page-title-main">TD Cowen</span> American investment bank

TD Cowen, is an American multinational investment bank and financial services division of TD Securities that operates through two business segments: a broker-dealer and an investment management division. The company's broker-dealer division offers investment banking services, equity and credit research, sales and trading, global prime brokerage, outsourced trading, global clearing and commission management services. Cowen's investment management segment offers actively managed alternative investment products. Founded in 1918, the firm is headquartered in New York and has offices worldwide. Cowen claims it is known for successfully identifying emerging industries early on, especially the emerging cannabis industry.

<span class="mw-page-title-main">TD Ameritrade</span> American online broker

TD Ameritrade is a stockbroker that offers an electronic trading platform for the trade of financial assets including common stocks, preferred stocks, futures contracts, exchange-traded funds, forex, options, mutual funds, fixed income investments, margin lending, and cash management services. The company receives revenue from interest income on margin balances, commissions for order execution, and payment for order flow.

<span class="mw-page-title-main">Stifel</span> American investment bank

Stifel Financial Corp. is an American multinational independent investment bank and financial services company created under the Stifel name in July 1983 and listed on the New York Stock Exchange on November 24, 1986. Its predecessor company was founded in 1890 as the Altheimer and Rawlings Investment Company and is headquartered in downtown St. Louis, Missouri.

Rodger O. Riney is an American billionaire and the founder of Scottrade, a stockbrokerage that was acquired by TD Ameritrade in 2017.

Payment for order flow (PFOF) is the compensation that a stockbroker receives from a market maker in exchange for the broker routing its clients' trades to that market maker. It is a controversial practice that has been called a "kickback" by its critics. Policymakers supportive of PFOF and several people in finance who have a favorable view of the practice have defended it for helping develop new investment apps, low-cost trading, and more efficient execution.

A turnkey asset management program (TAMP) allows independent financial advisors, typically fiduciaries, to outsource the management of some or all of their clients' assets. More recently, Certified public accountants, law firms and banks also are using them to enter the financial advice marketplace.

<span class="mw-page-title-main">Merrill Edge</span> Electronic trading platform provided by BofA Securities

Merrill Edge is an electronic trading platform and investment advisory service that provides self-directed and guided investment options for individuals and businesses. It is a subsidiary of Bank of America and was launched in 2010 after the merger between Merrill Lynch and Bank of America. Merrill Edge offers a wide range of investment products, including stocks, bonds, exchange-traded funds (ETFs), margin lending, mutual funds, and options.

Robinhood Markets, Inc. is an American financial services company headquartered in Menlo Park, California, that facilitates commission-free trades of stocks, exchange-traded funds and cryptocurrencies as well as individual retirement accounts via a mobile app introduced in March 2015. Robinhood is a FINRA-regulated broker-dealer, registered with the U.S. Securities and Exchange Commission, and is a member of the Securities Investor Protection Corporation. The company's revenue comes from three main sources: interest earned on customers' cash balances, selling order information to high-frequency traders and margin lending. As of March 2022, Robinhood had 22.8 million funded accounts and 15.9 million monthly active users. In April 2022, Robinhood rolled out a cryptocurrency wallet to more than 2 million users.

<span class="mw-page-title-main">Interactive Brokers</span> American financial services firm

Interactive Brokers LLC (IB) is an American multinational brokerage firm. It operates the largest electronic trading platform in the United States by number of daily average revenue trades. The company brokers stocks, options, futures, EFPs, futures options, forex, bonds, funds, and some cryptocurrencies.

References

  1. 1 2 3 4 5 "TD Ameritrade Closes Acquisition of Scottrade Financial Services, Inc" (Press release). Business Wire. September 18, 2017.
  2. 1 2 3 4 5 6 7 8 9 10 11 12 Edwards, Greg (September 18, 2017). "TD Ameritrade closes on acquisition of Scottrade". American City Business Journals .
  3. 1 2 3 4 5 "Charles Schwab completes acquisition of TD Ameritrade". www.spglobal.com. Retrieved 2023-05-02.
  4. 1 2 3 4 5 "Charles Schwab completes its $26B purchase of TD Ameritrade". KHGI. Associated Press. 2020-10-06. Retrieved 2023-05-02.
  5. ↑ "Top 150 2017: No. 22 Scottrade Financial Services Inc". American City Business Journals . March 24, 2017.
  6. 1 2 "TD Bank Group Completes Acquisition of Scottrade Bank" (Press release). CNW Group. September 18, 2017.
  7. 1 2 3 Stuenkel, Gil (June 18, 2000). "Rodger Riney, Scottrade Inc". American City Business Journals .
  8. 1 2 3 4 5 6 Tritto, Christopher (May 30, 2004). "Trading Up". American City Business Journals .
  9. ↑ "Scottrade increases services to Chinese Community". American City Business Journals . May 8, 2003.
  10. ↑ Tritto, Christopher (7 September 2006). "Scottrade wins Blues arena naming rights". American City Business Journals .
  11. ↑ "SEC Charges Scottrade for Misrepresentations to Customers" (Press release). U.S. Securities and Exchange Commission. June 24, 2008.
  12. ↑ "Scottrade Agrees to Pay $2.5 Million and Admits Providing Flawed "Blue Sheet" Trading Data" (Press release). U.S. Securities and Exchange Commission. January 29, 2014.
  13. ↑ Huang, Daniel (October 2, 2015). "Scottrade Discloses Data Breach Potentially Targeting 4.6 Million Clients" . The Wall Street Journal . ISSN   0099-9660.
  14. 1 2 Hackett, Robert (October 2, 2015). "Scottrade data breach affects millions of customers". Fortune .
  15. ↑ ANAND, PRIYA (October 8, 2015). "Scottrade hackers had access to brokerage account numbers, company reveals". MarketWatch .
  16. ↑ "FINRA Fines Scottrade $2.6 Million for Significant Failures in Required Electronic Records and Email Retention" (Press release). Financial Industry Regulatory Authority. November 16, 2015.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.