disclosed a regulatory snafu Friday that put it out of compliance with federal capital requirements during the summer. The brokerage said it corrected the problem after it was discovered by the
At issue is an Ameritrade program that lets customers transfer asset and liability balances into FDIC-insured banks. Staff examiners of the NASD and
told Ameritrade on Nov. 12 of their determination that, for regulatory purposes, certain customer credit balances had not been effectively moved into the bank accounts.
The staffers opined that the funds in question "are liabilities and assets of Ameritrade, rather than liabilities and assets only of the banks," the company said in a filing. That left the company out of compliance with minimum capital requirements under the SEC's rule 15c3-1, a situation that was corrected Nov. 15.
Ameritrade believes "the free credit balances were effectively transferred to the program banks in accordance with well-established banking law, that the accounts held at the program banks were the obligations of the program banks to each client and not obligations of Ameritrade Inc. and that the FDIC insurance passed through to each client in accordance with FDIC regulations," it said.
Ameritrade believes that it has been in compliance with the capital rules and continues to discuss the matter with regulators. Nevertheless, the company's management and audit board decided to file a 10-Q amendment for the quarter ended June 25 that includes a rider from accountant Deloitte & Touche saying its review of the filing "should no longer be relied upon.
Ameritrade said the dustup had no impact on its results of operations or cash flow for the quarter.