Judge Dismisses Charles Schwab Antitrust Lawsuit on Technical Issue

Corporate entities, such as the advisory firm suing to halt the Charles Schwab/TD Ameritrade merger on antitrust grounds, must be represented by qualified counsel.

The U.S. District Court for the Southern District of New York has dismissed on procedural grounds an antitrust lawsuit filed to stop the merger of Charles Schwab and TD Ameritrade.

In November 2019, the Charles Schwab Corporation and TD Ameritrade Holding Corporation announced their entrance into a definitive agreement for Schwab to acquire TD Ameritrade in an all-stock transaction. At the beginning of 2020, BlackCrown Inc., an independent Securities and Exchange Commission (SEC) registered wealth management firm, filed a civil antitrust action to prevent the combination of Charles Schwab and TD Ameritrade.

In a quickly issued and brief ruling, the New York District Court has dismissed the action “sua sponte” and without prejudice, because the plaintiff BlackCrown Inc. is not represented by counsel.

“Corporate entities—such as BlackCrown Inc.—must appear before the Court through counsel,” the dismissal decision states, citing a 1993 case Rowland v. California Men’s Colony, and a 1997 decision in Pridgen v. Anresen.

“It is well established that a layperson may not represent a corporation,” the decision says. “In other words, BlackCrown Inc. must retain an attorney should it wish to prosecute this case. Because BlackCrown Inc. has attempted to proceed with this action pro se, it must be dismissed. The Clerk of Court is directed to close this case.”

The complaint, now dismissed but free to be refiled, argues that the secession of competition between TD Ameritrade and Charles Schwab will harm consumers and independent financial advisers—particularly those with less than $200 million in client assets. According to BlackCrown, TD Ameritrade’s custodian services and technology are the only competitive alternatives to Charles Schwab for independent wealth management firms with smaller assets under management.