Attorney General Reaches Agreement with E*Trade and TradeKing in
Investigation of Retail Securities Brokerage Industry
Attorney General George Jepsen today announced agreements with online retail brokers E*Trade and TradeKing as part of a multi-state investigation into potential violations of antitrust law in the retail securities brokerage industry.
The investigation focuses 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 Attorney General and his partner states have reached in their 14-month investigation.
E*Trade and TradeKing agreed to continue to cooperate with the investigation and agreed to create and implement an antitrust compliance policy and training program for their respective employees. E*Trade and TradeKing also agreed to make monetary payments to Connecticut and its partner states totaling $200,000 to reimburse the states for their costs of the investigation. Connecticut and its partner states have closed their investigation into E*Trade, TradeKing and their respective employees.
“I am committed to ensuring open and competitive markets for all investors, regardless of the size of their portfolio, as well as a level playing field for businesses that provide services to those consumers,” Attorney General Jepsen said. “This investigation was prompted by concerns that several companies may have coordinated efforts to hinder the introduction of a new product offered to the small investor. My office, in conjunction with my partner states, conducted a thorough investigation and achieved resolutions that we believe will benefit all investors, small and large, by reorienting online retail brokers towards a commitment to enhanced competition compliance measures.
Jepsen credited E*Trade and TradeKing for both companies’ continued cooperation as well as their “commitment to provide better guidance to employees on competition issues.”
The multistate investigation began shortly after NASDAQ OMX Corporate Solutions, Inc. and Loyal3 Holdings, Inc. discontinued the partnership they had announced on June 2, 2011. Loyal3 markets itself as offering 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.
Neither Nasdaq nor Loyal3 are the subject of the Attorney General’s investigation.
Attorney General Jepsen is a co-chair of the Antitrust Committee for the National Association of Attorneys General.
The investigation is being led by Assistant Attorney General George W. O’Connell, with Assistant Attorney General Michael E. Cole, chief of the Antitrust Department.
Jaclyn M. Falkowski
Facebook: Attorney General George Jepsen