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]
 | |
| Formerly | Scottsdale Securities |
|---|---|
| Industry | Financial services |
| Founded | 1980 |
| Defunct | September 18, 2017 |
| Fate | Acquired 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] | |
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 edit
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 edit
Misrepresentations edit
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 edit
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 edit
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]
References edit
- ^ a b c d e "TD Ameritrade Closes Acquisition of Scottrade Financial Services, Inc" (Press release). Business Wire. September 18, 2017.
- ^ a b c d e f g h i j k l Edwards, Greg (September 18, 2017). "TD Ameritrade closes on acquisition of Scottrade". American City Business Journals.
- ^ a b c d e "Charles Schwab completes acquisition of TD Ameritrade". www.spglobal.com. Retrieved 2023-05-02.
- ^ a b c d e "Charles Schwab completes its $26B purchase of TD Ameritrade". KHGI. Associated Press. 2020-10-06. Retrieved 2023-05-02.
- ^ "Top 150 2017: No. 22 Scottrade Financial Services Inc". American City Business Journals. March 24, 2017.
- ^ a b "TD Bank Group Completes Acquisition of Scottrade Bank" (Press release). CNW Group. September 18, 2017.
- ^ a b c Stuenkel, Gil (June 18, 2000). "Rodger Riney, Scottrade Inc". American City Business Journals.
- ^ a b c d e f Tritto, Christopher (May 30, 2004). "Trading Up". American City Business Journals.
- ^ "Scottrade increases services to Chinese Community". American City Business Journals. May 8, 2003.
- ^ Tritto, Christopher (7 September 2006). "Scottrade wins Blues arena naming rights". American City Business Journals.
- ^ "SEC Charges Scottrade for Misrepresentations to Customers" (Press release). U.S. Securities and Exchange Commission. June 24, 2008.
- ^ "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.
- ^ Huang, Daniel (October 2, 2015). "Scottrade Discloses Data Breach Potentially Targeting 4.6 Million Clients". The Wall Street Journal. ISSN 0099-9660.
- ^ a b Hackett, Robert (October 2, 2015). "Scottrade data breach affects millions of customers". Fortune.
- ^ ANAND, PRIYA (October 8, 2015). "Scottrade hackers had access to brokerage account numbers, company reveals". MarketWatch.
- ^ "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.