Exhibit 10.3
COMMONWEALTH OF PENNSYLVANIA
BEFORE THE
PENNSYLVANIA SECURITIES COMMISSION

         
 
IN THE MATTER OF
  :    
 
  :    
TD Ameritrade, Inc.
  :   ADMINISTRATIVE PROCEEDING
 
  :   Docket No. 2008-05-06
 
  :    
 
  :    
RESPONDENT          
  :    
 
       

OFFER OF SETTLEMENT
SECTION I
     TD Ameritrade, Inc. (Respondent) submits this Offer of Settlement (Offer)
to the Pennsylvania Securities Commission (Commission) solely for the purpose of
settling allegations of the staff of the Commission and without any adjudication
of said allegations that Respondent violated a certain provision of the
Pennsylvania Securities Act of 1972 (1972 Act) in connection with the offer and
sale of auction rate securities (ARS) in the Commonwealth of Pennsylvania and in
the following states and territories within the United States of America:
Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware,
District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa,
Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan,
Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New
Jersey, New Mexico, North Dakota, North Carolina, Ohio, Oklahoma, Oregon, Puerto
Rico, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, US Virgin
Islands, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and
Wyoming.

 

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SECTION II

A.   Respondent admits the jurisdiction of the Commission and the regulatory
authorities of the aforementioned states and territories over it and over the
subject matter of this Offer.   B.   Respondent waives hearing and rehearing,
including that provided by Section 607 of the 1972 Act; 70 P.S. § 1-607.   C.  
Respondent waives any and all review by a court of law, including that provided
by Section 607(d) of the 1972 Act; 70 P.S. § 1-607(d).   D.   Respondent,
without admitting or denying the allegations therein, consents to the issuance
of the appended Findings of Fact, Conclusions of Law, and Order (Order) which
are incorporated herein by reference.   E.   Respondent consents to participate
in a special arbitration (Arbitration) for the exclusive purpose of arbitrating
any Eligible Investor’s consequential damages claim arising from their inability
to sell Eligible Auction Rate Securities.1

  1.   Respondent will notify Eligible Investors of the Arbitration process
under the following terms:

  a.   The Arbitration will be conducted by a single public arbitrator (as
defined by Section 12100(u) of the FINRA Code of Arbitration Procedures for
Customer Disputes);

 

1   The terms “Eligible Investor” and “Eligible Auction Rate Securities” are
defined terms in the Order for Pennsylvania Securities Commission Docket
2008-05-06 and they shall be given the same meaning in this Offer.

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  b.   Respondent will pay all applicable forum and filing fees. Eligible
Investors may seek recovery for their attorneys’ fees to the same extent that
they may under standard arbitration procedures;     c.   Any Eligible Investor
who chooses to pursue such claims in the Arbitration shall bear the burden of
proving that they suffered consequential damages and that such damages were
caused by their inability to access funds invested in Eligible Auction Rate
Securities;     d.   In the Arbitration, Respondent shall be able to defend
itself against such claims, provided, however, that Respondent shall not contest
liability for the illiquidity of the underlying ARS or use as part of its
defense any decision by an Eligible Investor not to borrow money from
Respondent;     e.   All customers, including but not limited to Eligible
Investors who avail themselves of the relief provided pursuant to this Order,
may pursue any remedies against Respondent available under the law. However,
Eligible Investors that elect to utilize the Arbitration process set forth above
are limited to the remedies available in that process and may not bring or
pursue a claim relating to Eligible Auction Rate Securities in another forum.  
  f.   All terms used but not defined herein shall have the meaning assigned to
them by the 1972 Act.

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SECTION III
          Respondent states that no promises of any kind or nature whatsoever
were made to induce it to make this Offer, and that this Offer is a voluntary
act on their part.
SECTION IV
          If this Offer is acceptable to the Commission, the provisions of the
Offer shall become effective as of the date of the issuance of the appended
proposed Order. If the Offer is not acceptable to the Commission, the Offer
shall be deemed withdrawn without prejudice to the Respondent.

             
 
           TD Ameritrade, Inc.    
 
           
     Date: July 9, 2009
  BY:   /s/ WILLIAM J. GERBER
 
   
 
                TITLE: Executive Vice President, Chief Financial Officer
 
           

                 
     Date:
      BY:        
 
 
 
     
 
   
 
      TITLE:        
 
         
 
   

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ACKNOWLEDGMENT
     Before me, the undersigned authority, personally appeared William J.
Gerber, an executive officer of TD Ameritrade, Inc., known or proved to me to be
the person who executed the foregoing Offer of Settlement, and acknowledged that
he/she executed the same freely and voluntarily and for the purposes stated
therein.

                  /s/ NANCY LOWREY       Notary Public        My commission
expires:

May 4, 2012   

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