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August 30, 2012

Miller, Two States Reach Agreement with E*Trade and TradeKing in Investigation of Retail Securities Brokerage Industry

(DES MOINES, Iowa)  Attorney General Tom Miller today announced agreements with online retail brokers E*Trade and TradeKing as part of a three-state investigation into potential violations of antitrust law in the retail securities brokerage industry.

The investigation focused on possibly collusive conduct by several retail securities brokers and firms that assist the brokers in executing their orders on an exchange, which may have hindered competition in the retail securities brokerage industry.

The agreements with E*Trade and TradeKing mark the third and fourth resolutions that the three state attorneys general have reached in their 14-month investigation.  Earlier, agreements we also entered into with Scottrade and TDAmeritrade requiring them to provide antitrust training to key employees.

E*Trade and TradeKing agreed to create and implement an antitrust compliance policy and training program for their respective employees.  E*Trade and TradeKing also agreed to pay $200,000 to Iowa and its partner states to reimburse the states for their costs of the investigation.  In exchange, the states have closed their investigation into E*Trade, TradeKing and their employees.

“This case highlights the importance of ensuring that businesses don’t unfairly try to squeeze competitors out of the marketplace,” Miller said.  “We were concerned that several companies may have coordinated efforts to hinder the introduction of a new product offered to the small investor.”

The multistate investigation, which involved Miller and state attorneys general in Connecticut and Missouri, began shortly after NASDAQ OMX Corporate Solutions, Inc. and Loyal3 Holdings, Inc. discontinued the partnership they had announced on June 2, 2011.  Loyal3 offers retail investors a fee-free, online platform to purchase securities and fractional shares of publicly traded companies directly from the companies themselves, without the need for traditional online retail brokers.

“This settlement will benefit both big and small investors,” Miller said.  “The agreement requires the online retail brokers to enhance their competition compliance measures, and that’s a good result.”

Miller credited E*Trade and TradeKing for both companies’ cooperation.  “These companies took our investigation seriously and cooperated from the outset so that we could reach an agreement that will facilitate better guidance to employees on competition issues, benefit the industry, and ultimately benefit consumers.”

Neither Nasdaq nor Loyal3 were the subject of the investigation.

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