Interactive Brokers gets additional time to respond to ex-client’s complaint

Maria Nikolova

The brokerage will have until November 1, 2019, to reply to the complaint filed by its former customer Robert Scott Batchelar over negligent position liquidation.

After its failure to dismiss the complaint filed by its former client Robert Scott Batchelar over negligent position liquidation, Interactive Brokers will now have to respond to the allegations made in that complaint.

The initial deadline to submit such a reply was October 15, 2019, but the brokerage has asked for more time to prepare its response. Interactive Brokers said that the plaintiff’s Second Amended Complaint is 33 pages long and contains more than 120 paragraphs of allegations. “Many of these allegations relate to the highly technical application of Defendants’ software to the liquidation of Plaintiff’s margin account”, the company noted. The defendants have not been able to respond to these allegations on time and asked for extension of time to file their reply.

On October 16, 2019, Judge Alvin W. Thompson of the Connecticut District Court, granted the defendants’ motion. The answer deadline is now set for November 1, 2019.

Let’s recall that Batchelar has brought a claim against Interactive Brokers, LLC alleging that its trading software was negligently designed, which resulted in an automatic liquidation of the positions in his account that cost him thousands of dollars more than it should have. The plaintiff is also suing Interactive’s parent company, Interactive Brokers Group, Inc. (“IBG”), under a theory of respondent superior, and Thomas A. Frank, an officer of IBG, claiming he was personally responsible. The defendants have moved to dismiss these claims but, on September 30, 2019, Judge Alvin W. Thompson nixed their attempt.

The court concluded that the expectations of the parties favor finding that a duty to use care exists in this case. The court also found that Frank owed a duty to Batchelar to use care in designing, testing, programming, and maintaining the software. The court also agreed with Batchelar’s claims that Interactive Brokers Group’s liability is derivative of Frank’s liability, as he is IBG’s employee. The court concluded that since Batchelar has adequately pled a claim of negligence against Frank, the motion to dismiss has to be denied with respect to the claim against IBG too.

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