Datek Unit Ordered to Halt Some Day Trading
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The National Assn. of Securities Dealers ordered a unit of Datek Online Holdings Corp. to halt day trading by some customers, raising a potential obstacle to the company’s acquisition by Ameritrade Holding Corp.
Ameritrade and Datek must obtain NASD approval for a change in control at Datek. Ameritrade, the nation’s fifth-largest Internet brokerage, plans to buy Datek, the seventh largest, for $1.3 billion.
The approval may be jeopardized because the NASD has expressed concern that a Datek unit is permitting customers to engage in an illegal form of day trading known as “free riding,” the purchase of shares without the money to pay for them, according to a filing by Ameritrade with the Securities and Exchange Commission.
Ameritrade and Datek say the unit, a business called IClearing that processes securities transactions, isn’t doing anything wrong, and they will “vigorously pursue” efforts to prove their case.
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