TD Ameritrade $4bil Purchase of Scottrade Not A Done Deal..Yet

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Broker-Dealer Consolidation Makes Sense, But TD Ameritrade Deal for Scottrade is Not A Done Deal..yet.

(Reuters) Oct 24-TD Ameritrade (AMTD.O) has agreed to buy Scottrade for $2.7 billion in a deal that would bring together two of the biggest U.S. discount brokerages, but is expected to face scrutiny from regulators. TD Ameritrade, the biggest U.S. discount brokerage by trade executions, said it would end up paying $2.7 billion for Scottrade’s brokerage business after the sale of Scottrade Bank to Toronto-Dominion Bank’s U.S. banking unit for $1.3 billion.

It is the latest in a wave of consolidation in an industry which has been grappling with intense competition and weak trading volumes as a result of small investors being drawn towards cheaper investment products that track major indexes.

E*Trade Financial Corp (ETFC.O), another discount broker, said in July that it would buy online brokerage OptionsHouse for $725 million, while Ally Financial Inc (ALLY.N) purchased TradeKing Group for about $275 million a month earlier.

In a connected deal, Toronto-Dominion Bank (TD.TO), TD Ameritrade’s biggest shareholder, said on Monday it had agreed to buy Scottrade’s banking business for $1.3 billion as it continues to ramp up its expansion in the United States.

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td ameritrade-scottrade-analysisTD Ameritrade’s acquisition of Scottrade combines two of the United States’ “big five brokerages”, the others being Charles Schwab, Fidelity Investments and E-Trade, and would leave only four major brokers operating in the marketplace.

“I think that the authorities in the United States are unlikely to let this pass without a pretty close look,” said John Briggs, an antitrust attorney with the law firm Axinn, Veltrop & Harkrider. “I think the transaction deserves scrutiny and will get scrutiny.”

TD Ameritrade’s CEO Tim Hockey said he believed regulators would look at the deal “fairly.”

“I still think this is a considerably competitive marketplace, that’s for sure. There are lots of opportunities for additional competitors to get into our space and continue to drive price competition,” he said.

The deal will produce a combined business with around 10 million client accounts and $1 trillion in assets, which will execute around 600,000 trades per day.

The purchase prices comprises $1.7 billion in cash and $1 billion in new shares. It will net a windfall for Scottrade’s co-founder and Chief Executive Rodger Riney, who set the company up in 1980. Riney, who said last year he was being treated for cancer, will join the TD Ameritrade board and also become TD Ameritrade’s fourth biggest shareholder.

TD Ameritrade, 42-percent owned by Toronto Dominion Bank, said it expected annual cost savings of $450 million as a result of the deal, with another $300 million of potential savings identified in the longer term.

As part of those plans, Hockey said around 25 percent of the combined business’s 600 branches will be closed. TD Ameritrade currently has 100 branches while Scottrade has 500. Hockey said in the interview the combined workforce of 10,000 will be reduced by about 20 percent.

 

For the full story from Reuters, click here

TD Ameritrade $2.7bil Purchase of Scottrade Not A Done Deal..Yet

 

Elizabeth Warren to SEC Chair Mary Jo White: I Want You Fired!

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MASS SENATOR ELIZABETH WARREN SENDS 12-PAGE LETTER TO WHITE HOUSE CALLING FOR SEC CHAIR’S HEAD

“If I were President, I would say “YOU”RE FIRED!”

(InvestmentNews.com) Sen. Elizabeth Warren has asked President Barack Obama to replace SEC Chairwoman Mary Jo White, despite two straight years of record-level enforcement actions by the agency.

In a letter to the president Friday morning, Ms. Warren focused on Ms. White’s “refusal to develop a political spending disclosure rule and repeated actions to undermine the agency’s mission of investor protection and the administration’s priorities.”

Ms. Warren, D-Mass., argues that the disclosure rule would increase transparency for investors by requiring companies to report political contributions.

In her letter, Ms. Warren reminded the president that he “may designate a new SEC chair at any time from among the existing SEC commissioners.”

An SEC spokeswoman declined to comment on Ms. Warren’s 12-page letter, which suggests the battle is just getting started.

“Congressional Democrats will fight to remove the recently passed rider from December’s government funding legislation, and I urge you to threaten to veto any effort to extend this corrupt policy,” Ms. Warren wrote. “But these efforts will be meaningless as long as Chair White continues to control the agenda of the SEC.”

Global consultant Private Placement Services LLC provides corporate Issuers seeking to raise capital via debt, equity convertible debt or other structures with a full suite of offering memorandum preparation and prospectus document writing. 

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Even though Ms. Warren’s passion for increased regulatory oversight of the financial services industry has never been subtle, it might be missing the big picture, according to Todd Cipperman, principal at Cipperman Compliance Services.

“I think you’d have a hard time finding anyone in the investment management industry who would say Mary Jo White has been easy on the industry,” he said. “I think the industry views the SEC’s enforcement staff as being very tough, and [Ms. White] has a very significant enforcement record.”

Elizabeth Warren to SEC Chair Mary Jo White: I Want You Fired! For the full story from InvestmentNews, click here

Broker-Dealers: CAT Got Your Tongue?

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Broker-Dealers are continuing to add to their compliance and regulatory ‘need-to-do’ checklist and in a recent SIFMA submission to the SEC, the list of items under the category Consolidated Audit Trail aka CAT compliance is only growing longer.  One senior compliance officer representing a regional broker-dealer went so far as to suggest that when questioning a staff member as to the status of a recent technology upgrade to the audit trail system, he received a blank look in response and found himself asking, “What’s wrong? Cat got your tongue?”  The staffer replied, “Not my tongue, my b-a-#-@-s!”

Below, courtesy of Traders Magazine’s Patrick Flannery, please find find a consolidated view of what broker-dealers are now contending with in terms of implementation challenges.

For broker-dealers, the Consolidated Audit Trail (CAT) may seem to be another weighty technical challenge, whose cost and implementation challenges will fall disproportionately on their shoulders (and their budgets). In fact, last week, SIFMA submitted a letter to the SEC detailing exactly how burdensome CAT will be.

The current plan, according to SIFMA, “would impose the vast majority of CAT-related costs on broker-dealers.” In its letter to the SEC, the US lobbyist asked the agency to demand that the parties developing CAT, namely, the exchanges and FINRA, explain how they justify requiring “broker-dealers to bear any of the financial burden of funding a system that exists to receive and process information that broker-dealers are required to report under SEC regulations.”

Global consultant Private Placement Services LLC offers a full suite of professional consulting and offering document preparation services for those seeking to raise money via a private placement of debt, equity or convertible securities. To learn more, visit PPM.co

What’s more, while the data submitted to CAT will give regulators better oversight, which is expected to help promote market fairness, several securities industry insiders have begun to question what type of access broker dealers will have to this data.  As we understand, it’s unclear at this point whether broker-dealers will to be able to directly query the very data that they must bear the burden (and cost) of collecting and reporting.

Despite these challenges, things may not be as bad as they seem. For those who learn to understand the value of the data they’re collecting, and how it can be mined for market insight, there’s potential for significant upshot.

The Heavy Lifting

CAT will be a much more detailed and sophisticated form of audit trail than FINRA’s OATS system, to which firms currently report data for regulatory oversight purposes, and as a result, reporting requirements will be significantly more complex. The data that CAT will consolidate is voluminous, and for many firms, who have this data stored in disparate systems, gathering, organizing and time stamping CAT data for reporting purposes will be a substantial if not a near-colossal undertaking.

Some aspects of CAT reporting are so challenging it’s hard to see the bright side. For example, every broker-dealer, exchange and all other self-regulatory organizations (SROs) reporting to CAT will have to establish and maintain a system of unique IDs for customers, accounts, counterparties and orders. The ultimate goal:  the entire life cycle of any equity or options order can be preserved for future review. A trade, originated through a retail broker, e.g., that is routed through a broker-dealer and executed on an exchange, should be able to be stitched together and reconstructed from CAT data so that the full picture is viewable from multiple perspectives.

When an original order is received, firms will have to capture and report an ID number of the customer originating the order, a CAT order ID, an identifier of the firm receiving the order, terms of the order and a time stamp measured to CAT time-stamping requirements (currently 50 milliseconds).

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Private Placement Services Portal Changes Name to PPM.co

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Industry Platform Adds To Full Suite of Private Placement Product and Service Offerings with Launch of New Website

(PRweb)–New York, NY–July 12 2016- PPM Services, Ltd, the global consulting firm specializing in private placement memorandum document preparation for debt and equities and business plan preparation services for start-ups, announced today that it has introduced a new suite of products and re-branded its website platform under the new domain, PPM.co. Owned and operated by parent company Broker Dealer LLC, PPM.co has also introduced new modules to its platform to support entrepreneurs and fast-growth business enterprises that are in need of documentation for Regulation A+ equity crowdfunding initiatives, Regulation D Exemptions, Eurobond and 144a bond and Regulation S offerings, EB-5, as well as CUSIP and ISIN code application services.

The updated PPM.co platform includes a newly-introduced referral service module for law firms, accounting firms and private investment brokers in need of outsourced securities offering document preparation services, as well as a recently-established investor relations and public relations service for companies in need of expert guidance and implementation of brand awareness and social media campaigns. Concurrent with the brand update, the firm has updated its Twitter account to @PPMexperts. The firm’s FaceBook page is available via this link.

About PPM.co

Established in 1999, PPM.co through its predecessor entities has provided documentation preparation services and investment offering material for hundreds of start-ups, fast-growth and well-established companies in virtually every part of the free world. PPM.co maintains its corporate office in New York’s Trump Building at 40 Wall Street, and regional offices staffed by a professional network of investment banking and legal consultants in Los Angeles, Austin, TX, Chicago, IL and Boston, MA, as well as London, Singapore, Hong Kong and Tel Aviv. Our expertise extends across most offering types, ranging from private placement memorandum (PPM) and business plan writing services to 144A offerings, Regulation A and Regulation A+, Regulation S (Reg S or 144a-Reg S mixtures), securities listing, Euro bond creation, IPO services, and obtaining securities identification numbers including CUSIP and ISIN (International Securities Identification Number). The firm’s website is located at www.ppm.co and social media outlets Twitter via @PPMexperts and FaceBook