TD Ameritrade Wins Legal Battle Over Handling of Investors’ Orders

A federal appeals court sided with TD Ameritrade in a legal battle over its practice of routing investors’ stock orders to high-speed trading firms in exchange for payments.

The U.S. Court of Appeals for the Eighth Circuit on Friday rejected a proposed class-action lawsuit from investors who accused the brokerage of securities fraud. The suit claimed TD Ameritrade had failed to abide by its duty to seek the best execution for customer stock trades.

The decision by a three-judge panel reversed a 2018 ruling from a federal judge in Nebraska who had allowed the suit to go forward.

It came as the practice at the heart of the lawsuit—called payment for order flow—came under renewed scrutiny in a series of recent congressional hearings devoted to the wild, Reddit-fueled rally in GameStop Corp.