Customers take E*TRADE to Court over platform outage during crude oil futures market crash

Maria Nikolova

The plaintiffs allege that E*TRADE’s system was unprepared for the negative pricing, failed to display accurate prices, and locked out users attempting to enter orders with negative values on April 20, 2020.

A lawsuit against E*TRADE Securities, LLC and E*TRADE Futures, LLC was launched earlier this week at the California Northern District Court. The plaintiffs are customers of the brokerage – Benjamin Whitesides, Aziz Si Hadj Mohand, and Matthew Cheung.

Their claims against E*TRADE stem from the crash that occurred in the crude oil futures markets on April 20, 2020. The plaintiffs allege that prior to the COVID-19 pandemic, the idea that oil futures could move into negative pricing territory was a known possibility. On April 20, however, that possibility turned into a reality.

The benchmark West Texas Intermediate (“WTI”) crude oil futures settled at negative ($37.63) by the close of the market on April 20 for the May contracts that were set to expire the following day. E-mini futures followed the slide of the regular futures. These, according to the plaintiffs, trapped traders who, due to the limitations of E*TRADE’s electronic trading system, were unable to a) see accurate information pricing information and b) trade at negative prices.

According to the complaint, simultaneous with the oil market’s precipitous decline into negative territory, E*TRADE’s system was unprepared for the negative pricing, failed to display accurate prices, and locked out users attempting to enter orders with negative values, resulting in an outage of its trading platform through the end of the session on April 20, 2020. Due the outage, E*TRADE’s customers were unable to exercise futures contracts on WTI through E*TRADE’s website, app, or call center.

Customers were also unable during this time to obtain accurate information or meaningful support from E*TRADE’s customer service specific to their individual investment needs, the complaint says.

According to the plaintiffs, E*TRADE failed to adequately or properly equip itself technologically and systemically to maintain the plaintiffs and class members’ access to trading services.

“Due solely to its own negligence and failure to maintain an adequate infrastructure, E*TRADE breached obligations owed to Plaintiffs and class members and caused them substantial losses”, the plaintiffs assert.

Despite possessing knowledge of the possibility of oil futures trading negatively for weeks, E*TRADE failed to test its online trading platform for this possibility, failed to ready its systems and correct known deficiencies, failed to disclose this possibility to its customers, and openly ignored multiple red flags from the relevant exchanges, the plaintiffs claim.

Plaintiffs thus bring this class action on behalf of themselves and all other E*TRADE customers within the United States who held futures contracts expiring during the outage, and who thereby suffered losses in their E*TRADE accounts. Plaintiffs assert claims for breach of contract, breach of the implied covenant of good faith and fair dealing, negligence, gross negligence, and violation of California consumer protection laws and seeks damages, restitution, and injunctive relief.

Read this next

Institutional FX

Fortex adds GBE Prime to liquidity offering

“This collaboration enhances our liquidity distribution capabilities, offering our clients improved pricing, order execution, and risk management. We look forward to the positive impact this integration will have on our clients.”

Retail FX

Fullerton Markets Caps Off Stellar Year with Dual Triumph at Gazet International Awards 2023

Fullerton Markets, one of the fastest-growing brokerages in the Asia Pacific, has today announced its remarkable success at the prestigious Gazet International Awards 2023, where it secured two coveted accolades, reinforcing its position as a global leader in multi-asset brokerage and marketing a triumphant end to the year.

Inside View

Are brokers really ready for EMIR Refit and ESMA changes in 2024?

The EMIR Refit and ESMA reporting requirements necessitate a strategic approach from brokers, involving major updates to reporting systems, data collection processes, and internal resources. We spoke with brokers and RegTech providers to learn more about the upcoming regulatory challenges.

Digital Assets

Binance to phase out BUSD support in two weeks

Binance has announced its plans to gradually phase out support for its native stablecoin, BUSD (Binance USD) by December 15, 2023. This move comes after Paxos, the issuer of BUSD, decided to stop minting new tokens.


Binance Labs invests $3.15M in Open Campus to advance Web3 education

Binance Labs, the venture capital arm of the cryptocurrency giant Binance, has invested $3.15 million in Web3 education platform Open Campus.

Institutional FX

Brighty App unveils EU B2B payment platform amidst exploding market

Brighty App is set to launch its European B2B platform, Brighty Business, this month. This platform is geared towards improving how businesses handle their financial operations, especially in the digital banking and cryptocurrency domains.

Digital Assets

Celsius’ withdrawal process slowed by overwhelming demand

Bankrupt crypto lender Celsius is taking steps to allow certain customers to withdraw their funds. However, some users have reported difficulties in logging in to process their withdrawals, as indicated by posts on various social media platforms.

Digital Assets

Cristiano Ronaldo hit with $1 billion lawsuit over Binance NFTs

Cristiano Ronaldo, the renowned footballer, is facing a class-action lawsuit in the United States over his promotion of Binance, the world’s largest cryptocurrency exchange.

Digital Assets

Zipmex creditors offered 3.35 cents on the dollar payout

Zipmex, a Thai crypto exchange grappling with financial difficulties, has proposed a restructuring plan to repay its creditors.