Schwab Must Face Ameritrade Deal Suit

Charles Schwab lost its bid to end antitrust litigation seeking to unwind its $26 billion acquisition of TD Ameritrade over claims that the transaction slashed rebates and discounts for retail investors.

Judge Amos L. Mazzant let the case move forward, saying it’s plausible the merger worsened consolidation within an already tight-knit financial sector, curtailing competition among brokers that kept trading costs in check through widespread “price improvement” for ordinary traders.

Related: New US Suit Looks To Undo Schwab-Ameritrade Deal

“Allegations of this nature, which indicate that a transaction has resulted in increased market concentration, are sufficient,” he wrote. “Whether divestiture or another form of injunctive relief is appropriate in this case will ultimately turn on a balancing of the equitable principles.”

The company’s defenses rely on fact-intensive arguments that can’t be resolved until later in the case, the judge said.

A spokesperson for Schwab, in a statement to Bloomberg Law, said Monday that the company “will continue to aggressively seek the dismissal of this meritless case.”

“Allegations are not facts,” the firm said. “We look forward to demonstrating the value and appropriateness of our approach in court. Any suggestion that the combination of these two client-centric firms has led to less favorable outcomes is simply not true.”

The dispute concerns changes to the retail brokerage industry in recent years as fintech firms developing complex algorithms—acting as market makers—drive a shift from a commission-based business model to one dependent on sales of trading data from downstream brokerages like Schwab.