TD Ameritrade Anecdotes

Updated Monday, March 22, 2010

Some readers have informed us of terrible customer service experiences that they encountered with TD Ameritrade. If you have your own customer service experience that you would like to share, either good or bad, with TD Ameritrade or other online brokers, please email us at [email protected] so that we can share with our readers.

Reader Experience #1
I have an account with TDAmeritrade and I will be closing this year (I hope) because they lied to me about one of their funds - RTPQX. There is a whole group of people that has formed because of this.
You can find the group at
I think you should downgrade this firm.

Reader Experience #2
I have also had a terrible experience with TD Ameritrade. They mis-represented RYPQX as a Money Market and allowed me to put my entire life savings, including the proceeds from my home sale. The fund froze and now they claim it is a bond fund. This was not sold to me as such. This has been the worst experience I have ever had.

The Lawsuit
TD Ameritrade had a class action lawsuit filed against them for their Reserve Yield Plus Funds.

From this article:
A class action lawsuit has been filed against TD Ameritrade and the Reserve Short-Term Investment Trust on behalf of investors who held shares of the Reserve Yield Plus Fund between July 27, 2007, and September 16, 2008.
The lawsuit was filed in the United States District Court for the Southern District of New York, claiming that investors suffered substantial financial losses as a result of false and misleading statements about the nature of risk that would be associated with the fund.
The allegations against TD Ameritrade are that they misrepresented the nature of the fund, incorrectly informing clients that it was a money market fund when it was not. Fund investments included Lehman Brothers debt, so when that firm went bust the fund suffered losses. When the value of the fund's assets dropped TD Ameritrade was unable to meet client redemptions. My understanding is that a portion of the assets from the fund have already been returned to investors, and more assets will likely be distributed in the future. Exactly how much will be returned is not known, though 100% of the originally value seems unlikely.

The bigger issue at hand is not that the fund lost value but that TD Ameritrade may have misrepresented the nature of the fund and the risks involved to clients. I doubt many investors would invest in a money market like fund if they knew that a large portion of those assets were invested in the debt of one highly levered investment bank.

From the comments section of the above article...
Comment by Lou on 2 December 2008:
I am a former employee of TD Ameritrade as an Investment Consultant. I have been trained to recommend this investment to clients who were looking to transfer their accounts out of TD Ameritrade due to very low money market rates. I was told to tell clients this is a money market fund which is very safe and will never go down in value. I also have a significant portion of my own retirement assets in this fund since I was told it was safe.

Not exactly confidence inspiring. Let this be a warning to current and potential TD Ameritrade clients.
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