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Reserve Yield Plus Fund TD Ameritrade

TD Ameritrade Customers Cry Foul Over Reserve Yield Plus Fund

In September, investors who had been sold the Reserve Yield Plus Fund (RYPQX) learned they could not access their money. Although the fund had been marketed by TD Ameritrade and other brokerage firms as a conservative, safe-as-cash investment, similar to a money market fund, the RYPQX fund is technically a short term bond fund.

This has become a familiar story on Wall Street: Investment firms and brokerages misrepresent the risk factors and asset composition of certain investment products to clients and, in turn, investors find their life savings in peril.

Another Reserve Fund marketed by TD Ameritrade and others is the Primary Fund. On Sept. 16, that fund “broke the buck”- meaning investors were left with less than $1 for every dollar invested.

As reported Sept. 29 on Bloomberg.com, TD Ameritrade apparently has pledged up to $50 million for investors in the Primary Fund and up to $5 million for shareholders in the International Liquidity Fund - another Reserve fund that “broke the buck” - to make clients whole because these funds were utilized as cash sweep programs. Cash sweep programs are typically used by investors who want to park their cash from a maturing certificate of deposit.

For investors with immediate cash needs, TD Ameritrade supposedly is prepared to offer “non-purpose loans” at 5 percent interest rates. According to the Bloomberg article, however, some investors have never been informed about such a proposal in their conversations with TD Ameritrade.

A number of TD Ameritrade's clients in the Reserve Yield Plus Fund and the Reserve Primary Fund are retirees. They have their life savings tied up in these funds and need access to their cash immediately.

Other investors in the funds are families who have to make a mortgage payment or pay their children's tuition bills. Because TD Ameritrade marketed these funds as “cash-like” investments, they thought their money was safe and available when they needed it. They were wrong.

So far, TD Ameritrade isn't saying if or when investors in the Reserve funds will be able to redeem their shares or access their money.

If you have made investments in the Reserve Yield Plus Fund, contact us today.

Our affiliation of securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.


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