The National Association of Securities Dealers has fined online brokerage Ameritrade $10 million for allegedly breaking margin trading regulations.
NASD's investigation focused on the past practice of permitting cash account clients to utilise the proceeds from the sale of securities that had not yet settled to purchase other securities. Ameritrade says its efforts to address this matter began shortly before the September 2002 closing of the merger with Datek Online Holdings, the parent of Datek and iClearing. However, the company did not complete the modifications to its systems and procedures until May 2003, despite repeated warnings by NASD.
Mary Schapiro, NASD vice chairman, comments: "The sanctions imposed here today reflect not only the importance of these rules but the firms' failure to timely respond to Nasd's concerns."
In settlement, Ameritrade, Datek and iClearing neither admitted nor denied the charges.