Sec Form 13D Filing - TORONTO DOMINION BANK filing for SCHWAB CHARLES CORP (SCHW) - 2020-10-16

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No.     )*

The Charles Schwab Corporation

(Name of Issuer)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

808513105

(CUSIP Number)

Norie C. Campbell, Esq.

The Toronto-Dominion Bank

Toronto-Dominion Centre

P.O. Box 1

Toronto, Ontario M5K IA2

(856) 751-2721

Copy to:

Lee Meyerson, Esq.

Ravi Purushotham, Esq.

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017

(212) 455-2000

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

October 6, 2020

(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.  ☐

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies of this statement are to be sent.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

This Schedule 13D (the “Schedule 13D”) relates to the common stock, par value $0.01 per share (the “Common Stock”) of The Charles Schwab Corporation, a Delaware corporation (the “Issuer”). The address of the principal executive offices of the Issuer is The Charles Schwab Corporation, 211 Main Street, San Francisco, California 94105.

This Statement is being filed by The Toronto-Dominion Bank, a Canadian chartered bank (“TD”), TD Group US Holdings LLC, a Delaware limited liability company and a wholly-owned subsidiary of TD (“TD GUS”), and TD Luxembourg International Holdings SARL., a private limited liability company existing under the laws of Luxembourg and a wholly-owned subsidiary of TD GUS (“TD LIH” and, together with TD and TD GUS, the “TD Entities” or the “Reporting Persons”). TD and its subsidiaries are principally engaged in the business of personal, commercial and wholesale banking and wealth management. The principal executive office of TD is located at Toronto-Dominion Centre, P.O. Box 1, Toronto, Ontario, Canada M5K IA2, the principal executive office of TD GUS is located at 251 Little Falls Drive, Wellington, Delaware 19808 and the principal executive office of TD LIH is located at 8-10 Avenue de la Gare, Luxembourg, Grand-Duchy of Luxembourg L-1610.

The name, business address, citizenship and present principal occupation or employment of each director and executive officer of each of TD and TD LIH and the name and principal business and address of any corporation or other organization in which such employment is conducted are set forth in Schedule I hereto and are incorporated by reference herein.

During the last five years, none of the TD Entities or, to the knowledge of the TD Entities, any of their respective executive officers or directors named in Schedule I hereto has (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

On October 6, 2020 (the “Effective Date”), the Issuer and TD Ameritrade Holding Corporation, a Delaware corporation (“TD Ameritrade”), consummated the transactions contemplated by the Agreement and Plan of Merger, dated as of November 24, 2019 (as amended, the “Merger Agreement”), by and among the Issuer, TD Ameritrade and Americano Acquisition Corp., a Delaware corporation and a direct, wholly owned subsidiary of the Issuer (“Merger Sub”), pursuant to which Merger Sub merged with and into TD Ameritrade, with TD Ameritrade surviving the merger as a wholly owned subsidiary of the Issuer (the “Merger”).

As a result of the Merger, each share of TD Ameritrade common stock, par value $0.01 per share (the “TD Ameritrade Common Stock”), issued and outstanding immediately prior to the effective time of the Merger, but not including certain shares of TD Ameritrade Common Stock as set forth in the Merger Agreement, was converted into the right to receive 1.0837 shares of common stock of the Issuer in accordance with the Merger Agreement, except that in accordance with the Merger Agreement, TD and its affiliates (including TD GUS and TD LIH) received 178,104,934 shares of Common Stock and 77,007,055 shares of non-voting common stock, par value $0.01 of the Issuer (“Nonvoting Common Stock” and together with the Common Stock, the “Common Shares”). Subsequent to closing of the Merger, TD LIH converted 500,000 shares of Common Stock into 500,000 shares of Nonvoting Common Stock to accommodate ordinary course securities trading by TD and its affiliates. After completion of the conversion described above, TD and its affiliates may be deemed to have beneficially owned 177,604,934 shares of Common Stock and 77,507,055 shares of Nonvoting Common Stock. TD LIH may, from time to time, convert additional shares of Common Stock into Nonvoting Common Stock to accommodate such ordinary course trading.

The information set forth in Items 3 and 6 of this Schedule 13D is incorporated by reference in its entirety into this Item 4.

The Reporting Persons acquired the securities reported herein for investment purposes, subject to the following:

The Reporting Persons intend to review from time to time the investment in the Issuer and the Issuer’s business affairs, financial position and capital requirements. Based upon such review, as well as general economic, market and industry conditions and prospects existing at the time, the Reporting Persons may consider from time to time alternative courses of action as permitted by the Stockholder Agreement (as defined below). Subject to the terms of the Stockholder Agreement, such actions may include sales of Common Shares or other securities of the Issuer through sales plans, in open market transactions, privately negotiated transactions, through a public offering or otherwise, or the acquisition of additional Common Shares or other securities of the Issuer directly from the Issuer, through open market purchases, in privately negotiated transactions or otherwise, including the disposition or acquisition of Common Shares or other securities of the Issuer in connection with TD’s banking, securities, derivatives, asset management or similar businesses, including in client, brokerage and investment accounts. Subject to the terms of the Stockholder Agreement, the Reporting Persons may also propose or take one or more of the actions described in subsections (a) through (j) of Item 4 of Schedule 13D and may discuss such actions with the Issuer and Issuer’s management and the board of directors (the “Board”), other stockholders of the Issuer and other interested parties.

Effective upon the consummation of the Merger, Bharat Masrani, CEO and director of TD Bank, and Brian Levitt, Chair of the board of directors of TD Bank were appointed to the Board, and, in such capacity, may have influence over the corporate activities of the Issuer, including activities which may relate to items described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.    

Except as otherwise set forth herein, the Reporting Persons do not have any current plans or proposals which would relate to or would result in any of the events or matters described in (a) – (j) of Item 4 of Schedule 13D.

(a)-(b) As of October 6, 2020, the Reporting Persons may be deemed to have beneficially owned an aggregate of 177,604,934 shares of Common Stock, representing approximately 9.87% of the outstanding shares of Common Stock (based on the 1,798,539,740 number of shares of Common Stock outstanding as of the Effective Date), as provided by the Issuer.

As of October 6, 2020, TD LIH was the record and beneficial owner of 177,448,580 shares of Common Stock. TD GUS, as the sole owner of TD LIH, and TD, as the sole owner of TD GUS, may be deemed to be the beneficial owners of the shares of Common Stock held by TD LIH.

The 177,604,934 shares of Common Stock reported herein as beneficially owned by TD include 156,354 shares of Common Stock that may be deemed to be beneficially owned directly by TD or indirectly by TD through subsidiaries in connection with TD’s banking, securities, derivatives, asset management or similar businesses, including in client, brokerage and investment accounts.

Except for Mr. Levitt, Ms. Maidment, Ms. Miller, Mr. B. Ferguson, and Ms. Goggins as of October 6, 2020, none of the individuals listed on Schedule I beneficially owned any shares of Common Stock. As of October&# xA0;6, 2020, Mr. Levitt beneficially owned 21,846 shares of Common Stock, Ms. Maidment beneficially owned 83,158 shares of Common Stock, Ms. Miller beneficially owned 16,466 shares of Common Stock, Mr. B. Ferguson beneficially owned 9,759 shares of Common Stock, and Ms. Goggins beneficially owned 1,010 shares of Common Stock. Each of Mr. Levitt, Ms. Maidment, and Ms. Miller acquired such securities pursuant to the terms of the Merger Agreement while Mr. B. Ferguson and Ms. Goggins held their respective securities prior to the Merger and continue to hold such securities following the Merger.

The shares of Common Stock reported as beneficially owned herein excludes the 77,507,055 shares of the Issuer’s Nonvoting Common Stock held by TD LIH.

(c) Except as otherwise described in this Statement and the transactions described in Schedule II attached hereto, none of the TD Entities nor, to the best of the TD Entities’ knowledge, any of the individuals named in Schedule I to the Statement, has engaged in any transaction in shares of Common Stock in the 60 days preceding October 6, 2020.

The information set forth in Items 3 and 4 of this Schedule 13D is incorporated herein by reference.

Stockholder Agreement

Concurrently with the execution and delivery of the Merger Agreement, TD entered into a stockholder agreement (as it may be amended or otherwise modified from time to time, the “Stockholder Agreement”) with the Issuer, which agreement became effective as of the Effective Date. The Stockholder Agreement sets out, among other things, transfer restrictions, ownership limitations, standstill restrictions, Board designation rights and voting agreements.

Transfer Restrictions

Subject to certain exceptions set forth in the Stockholder Agreement, TD and its affiliates will not transfer Company Securities (as defined in the Stockholder Agreement), including the Common Shares, for a period of eight months following the Effective Date. Following such eight-month lock-up period, TD is not permitted to sell the Company Securities except as set forth in the Stockholder Agreement, including:

Ownership Restrictions

TD and its affiliates will not take any actions that result in TD owning Voting Securities (as defined in the Stockholder Agreement) representing more than 9.9% of the total Voting Securities of the Issuer (the “Voting Limitation Percentage”). If TD becomes aware that TD owns Voting Securities in excess of the Voting Limitation Percentage, then TD and the Issuer will as promptly as practicable effect an exchange where each share of Common Stock in excess of the Voting Limitation Percentage is exchanged for one share of Nonvoting Common Stock. Furthermore, if the Issuer notifies TD that an event is reasonably likely to occur that will result in TD owning Common Stock in excess of the Voting Limitation Percentage, then, upon the occurrence of and concurrently with such event, TD and the Issuer will effect an exchange of each share of Common Stock owned by TD in excess of the Voting Limitation Percentage, after giving effect to that event. If TD holds Common Shares in excess of 14.9% of the issued and outstanding Common Shares at such time (the “Common Ownership Limitation”), then TD will, as soon as practicable (but, in any event, within twelve months), sell or dispose of Common Stock in excess of the Common Ownership Limitation.

Standstill Restrictions

TD is also subject to standstill restrictions set forth in the Stockholder Agreement (including effecting or proposing to effect any acquisition of securities in excess of the Common Ownership Limitation or any tender or exchange offer, merger or other business combination involving the Issuer) which fall away upon the earlier of (i) a change of control of the Issuer or (ii) the later of (a) TD ceasing to hold at least 5% of the Common Stock or (b) two years after the Effective Date.

Board Designation Rights

TD shall initially have the right to designate two directors (each a “TD Director”) to be nominated for election to the Issuer’s Board, and the total number of directors that TD is entitled to so designate shall be subsequently adjusted from time to time pursuant to the Stockholder Agreement.

Any reduction in the number of TD Directors set forth above will be accomplished by the resignation or removal of one or more of the TD Directors (as designated by TD in the case that the number of TD Directors is reduced to one). Such resignation or removal shall be effective (A) in the case of a reduction from two TD Directors to one TD Director pursuant to the first and second bullet above, as of immediately prior to the next annual meeting of stockholders of the Issuer or (B) in the case of a reduction pursuant to the last bullet above or a reduction to no TD Directors, immediately upon occurrence of the relevant event.

For purposes of the Stockholder Agreement, the “Ownership Levels” are as follows:

For so long as TD is entitled to designate two TD Directo rs, (A) a TD Director will be a member of the Compensation Committee of the Board, (B) the other TD Director will be a member of another standing committee of the Board, as determined by the Nomination and Corporate Governance Committee and (C) a TD Director will be the chair or vice-chair of the Compensation Committee or such other standing committee as determined by the Nomination and Corporate Governance Committee. For so long as TD is entitled to designate only one TD Director, such TD Director will be a member of the Compensation Committee of the Board.

Voting Agreements

With respect to any matter submitted to the holders of Common Stock for a vote or for consent (other than to the extent relating to the election or appointment of a TD Director), TD will (a) in the case of any vote, cause all shares of Common Stock that it beneficially owns (and which are entitled to vote on such matter) to be counted as present for purposes of calculating a quorum and (b) vote, or cause to be voted, or execute written consents with respect to, all shares of Common Stock that it beneficially owns (and which are entitled to vote on such matter) at its election either (i) in accordance with the recommendation of the Board or (ii) in the same proportions as the votes cast on such matter in respect of all shares of Common Stock not beneficially owned by TD; provided that TD shall only be required to vote, or cause to be voted, or execute written consents, to the extent such matter is not inconsistent with any provision of the Stockholder Agreement.

The foregoing description of the Stockholder Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Stockholder Agreement, which is incorporated by reference as Exhibit B to this Schedule 13D and is incorporated herein by reference.

Registration Rights Agreement

Concurrently with the execution and delivery of the Merger Agreement, TD entered into a registration rights agreement (the “Registration Rights Agreement”) that provides TD and certain of the other holders of the Common Stock (the “Holders”), customary “demand” and “piggyback” registration rights. The Registration Rights Agreement also provides that Issuer indemnify the Holders against certain liabilities which may arise under the Securities Act.

The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Registration Rights Agreement, which is incorporated by reference as Exhibit C to this Schedule 13D and is incorporated herein by reference.

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated: October 16, 2020

SCHEDULE I

INFORMATION RELATING TO THE DIRECTORS AND EXECUTIVE OFFICERS

OF THE TD ENTITIES

TD LUXEMBOURG INTERNATIONAL HOLDINGS SARL

DIRECTORS

SCHEDULE II

60 Day Trading History

The above trades were effected in the open market by TD directly or indirectly by TD through subsidiaries in connection with TD’s banking, securities, derivatives, asset management or similar businesses, including in client, brokerage and investment accounts.