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TD Ameritrade refuses to give hedge funds records they requested

Date: Monday, July 9, 2007
Author: The Associated Press

LINCOLN, Nebraska: The squabble between TD Ameritrade Holding Corp. and two hedge funds continued Friday as the online brokerage refused the funds' request to examine records related to any merger discussions.

Earlier this week, Ameritrade gave in to one demand from the funds by reorganizing its mergers and acquisitions committee to exclude board members who represent the Omaha-based company's two largest shareholders: Toronto-Dominion bank and the family of company founder Joe Ricketts.

But Friday's two-sentence statement made it clear Ameritrade was not ready to comply with every demand from the funds, Jana Partners and S.A.C. Capital Advisors, which have been urging Ameritrade to join forces with a major competitor such as E-Trade Financial Corp.

In its statement, Ameritrade said it won't provide any of the requested documents because it does not believe the law requires it.

After the company released its statement Friday, shares of Ameritrade fell 6 cents in after-hours trading to $20.54.

Last week the hedge funds, which claim to own 8.4 percent of Ameritrade shares, made a formal demand as shareholders for records related to the company's exploration of possible strategic alternatives. The funds said they were trying to determine whether Ameritrade's largest shareholder, the Canadian Toronto-Dominion Bank, has undermined merger talks.

The hedge funds have said Toronto-Dominion would oppose a buyout because it might diminish the bank's stake in Ameritrade. The funds also contend the Canadian bank, which owns about 40 percent of Ameritrade, stands to lose strategic benefits.

Toronto-Dominion officials have denied any conflict of interest.

Throughout the monthlong dispute with the hedge funds, Ameritrade officials have insisted the company regularly considers possible acquisitions or buyouts, but will only pursue such a deal if it will benefit shareholders in the long run.