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BUREAU OF FINANCIAL INSTITUTIONS
Department of Professional and Financial Regulation
State of Maine
ORDER APPROVING APPLICATION OF
TD AMERITRADE HOLDING CORPORATION, OMAHA, NEBRASKA
TO ACQUIRE CONTROL OF
INTERNATIONAL CLEARING TRUST COMPANY, BALTIMORE, MARYLAND
TD AMERITRADE Holding Corporation, Omaha, Nebraska ("TD AMERITRADE"),
filed an application, pursuant to Title 9-B M.R.S.A. Chapter 101 to
acquire control, through its wholly-owned subsidiary, TD AMERITRADE
Online Holding Corp., Omaha, Nebraska, of International Clearing Trust
Company, Baltimore, Maryland ("ICTC"). The application was
accepted for processing on August 2, 2006. Public notice, as required
by Title 9-B M.R.S.A. 252.2(B), was provided by publication, posting
on the Bureau's website and e-mail to interested parties affording them
an opportunity to either submit written comments or request a hearing.
The Bureau received no comments during the public comment period ending
September 3, 2006.
A Principal Bank Examiner of the Maine Bureau of Financial Institutions
conducted an investigation of this transaction. All evidence and pertinent
material that were considered by the Examiner were also considered by
the Superintendent in reaching his decision.
ICTC is wholly-owned by Gail Weiss & Associates, Inc. ("GWA"),
a subchapter S Maryland corporation. The Bureau approved the formation
of ICTC as a nondepository trust company in Oct-02 and ICTC commenced
operations Apr-30-04. GWA provides mutual fund trading software and
outsourcing services to 401(k) plans and other retirement plans. ICTC
offers a full array of custody and directed-trustee services for mutual
funds and other assets that trade on the National Securities Clearing
Corporation's Fund/SERV platform ("NSCC"). ICTC partners with
third party administrators, registered investment advisors, banks, trust
companies and other organizations to provide a seamless trading platform;
it does not manage client funds or directly solicit retail clients.
As of June 30, 2006, ICTC had trust assets of $34 million.
TD AMERITRADE has agreed to acquire substantially all the business
and assets of GWA, including all of the outstanding equity interests
in ICTC. TD AMERITRADE is a publicly traded company that, through a
number of subsidiaries, provides a range of investment products and
services, including securities brokerage and investment advisory services;
its products and services are tailored to meet the needs of self-directed
investors and independent fee-based investment advisors. TD AMERITRADE
plans to (1) expand ICTC's business by utilizing TD AMERITRADE's existing
distribution channels and position in the financial services industry,
(2) implement, through ICTC, a family of collective investment funds
as investment options, and (3) offer a broad array of investment options,
including publicly traded securities, mutual funds and options, to ICTC
customers. As of June 30, 2006, TD AMERITRADE had client assets of $255
billion in more than 6 million accounts.
The financial and managerial resources of both ICTC and TD AMERITRADE
are satisfactory and the Bureau does not object to TD AMERITRADE's business
plan. Other statutory factors are consistent with approval and therefore
the application of TD AMERITRADE to acquire control of ICTC is approved,
subject to the following conditions:
1. The Bureau must have no objection to the signed Asset Purchase Agreement
between Gail Weiss & Associates, Inc. and TD AMERITRADE.
2. ICTC shall maintain Tier 1 capital (as defined in Regulation 27)
not less than the greater of (a) $500,000 or (b) the sum of (1) 10 basis
points (0.10%) of discretionary assets and (2) 5 basis points (0.05%)
of nondiscretionary assets, including assets held in custody, unless
a different amount is established by the Superintendent pursuant to
9-B MRSA § 412-A (2). As such, the Superintendent reserves the
right to change the above formula for determining ongoing capital adequacy.
3. During the first two years of operation after consummation of the
ownership change, ICTC shall not implement any material change or deviation
from its operating plan without the prior written approval of the Bureau.
4. During the first two years of operation after consummation of the
ownership change, the Bureau must review and have no objection to any
proposed executive officer or director.
The transaction shall be completed within one year of the effective
date of this Order, unless a written extension is granted by the Superintendent.
Any person aggrieved by this Order shall be entitled to a judicial review
of the Order in accordance with the Maine Administrative Procedure Act,
Title 5, Chapter 375, subchapter VII.
By order of the Superintendent, effective December 2, 2006.
Lloyd P. LaFountain III
November 2, 2006