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18 Jun 2007

Hedge Fund Investors Call For Independent Commitee

Two hedge fund shareholders with major stakes in TD Ameritrade Holding Corp, JANA Partners LLC and SAC Capital Advisors LLC, today sent a letter to Ameritrade's Board of Directors questioning their recent announcement regarding the exploration of strategic combinations.

The two hedge fund investors called on the Board to create a special committee free from influence by the company's largest shareholder to explore such combinations. In addition, JANA and SAC provided the Board with their own analysis of what they called the "massive value creation opportunity" inherent in a combination with E*Trade Financial or Charles Schwab.

In today's letter, JANA and SAC challenged TD Ameritrade's suggestion that the timing may not be right for such a combination, and called on the Board to demonstrate why such a transaction at this time would not be in shareholders' best interests.

They also stated their belief that the Board's strategic review process, as described by TD Ameritrade this week, fails to cleanse the Board's review of what they called "glaring" conflicts of interest stemming from the influence of Toronto-Dominion, including Toronto-Dominion's desire to maintain substantial levels of ownership and influence in TD Ameritrade and its reliance on the company to advance its own business strategy.

The letter states, "TD Ameritrade has poured over $200 million into advertising since the merger with TD Waterhouse and maintains over 100 branches at an estimated annual cost of $75 million, yet has produced little in the way of asset growth. In the 12 months ended March 31, 2007, the number of total customer accounts has grown by less than 3%, and the number of more valuable qualified accounts (those with more than $2,000 in assets) has actually declined."

"Additionally, given the Board's desire to address these matters in full public view, we believe it is all the more important that shareholders have a full and accurate accounting of the Board's actions with respect to possible strategic combinations, so that they may judge for themselves the Board's conduct and whether each director has honored his fiduciary duties."

Jana Partners is a $5 billion dollar activist fund based in San Francisco. The fund, run by Barry Rosenstein, has core long and short positions in companies in which it constantly reviews strategic alternatives. It also invests in under followed orphan equities and other event-driven strategies.

SAC Capital Advisors is a group of hedge funds founded by Steven A. Cohen. Investors' money is channeled through seven different "portfolio companies" or fund, including a core fund, a global diversified fund, and a health-care fund, each with an offshore counterpart. Cohen and his business partners are the biggest investors in SAC Capital Advisors, comprising some 60% of its assets.