Antitrust Suit Challenging Schwab-TD Ameritrade Deal Can Proceed, Judge Rules

What You Need to Know

Plaintiffs claim the deal lessened competition, harming investors.
Schwab plans to aggressively seek dismissal, calling the case meritless.

An antitrust lawsuit seeking to unravel the Charles Schwab-TD Ameritrade merger may proceed following a recent federal court ruling.

The retail investor plaintiffs in the class action lawsuit against Schwab contend the 2020 deal substantially lessened competition, harming brokerage clients. Schwab had asked the court to dismiss the case.

Schwab’s TD Ameritrade acquisition formed “unprecedented market concentration,” giving the combined companies about half of all retail order flow payments, the plaintiffs claim in the suit. They seek monetary damages and an order divesting Schwab of TD Ameritrade assets or otherwise separating their business lines.

“When considering a motion to dismiss … the court must accept as true all well-pleaded facts in the plaintiff’s complaint and view those facts in the light most favorable to the plaintiff,” U.S. District Judge Amos Mazzant wrote on Feb. 24, denying Schwab’s motion to dismiss the case.

The court found Schwab’s arguments for dismissal “are unavailing at this stage of the litigation, and it finds that plaintiffs have stated plausible claims for relief” adequate to defeat the dismissal motion.

Among other points, Mazzant said plaintiffs’ contentions the deal had concentrated market competition are sufficient to survive the motion to dismiss. The plaintiffs, who allege they now pay higher transaction costs for their trades and suffer from diminished consumer choices in the wake of the merger, also have pleaded an antitrust injury sufficient for the case to proceed, he ruled.

“The court finds that plaintiffs have adequately alleged that anticompetitive results flow from the Charles Schwab-TD Ameritrade merger,” Mazzant wrote in his opinion and order.