On Feb. 3, 2011, the SEC announced that it had settled with TD Ameritrade over investments in the Reserve Yield Plus Fund. Specifically, the SEC found that TD failed to supervise its representatives, leading to:
representatives . . . at times mischaracterized the Fund as a “money market fund,” an “enhanced money market fund” or a “higher yielding money market.” Respondent’s representatives also at times equated the Fund to money market funds in terms of “safety and liquidity” or stated that the Fund was insured by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. Other times, representatives offered the Fund in response to a customer’s specific request for a money market fund or an instrument with similar risk, without discussing the nature or risks of the Fund.
This is an example of commissions coming before the needs of investors. Implicit here is that investors were looking for conservative investments, but were placed in much riskier securities. Good job here by the SEC.
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