Interactive Brokers voices determination to defend itself in case brought by former customer

Maria Nikolova

The complaint alleges that customers of Interactive Brokers LLC were harmed by alleged “flaws” in the computerized system used by the broker.

Online trading major Interactive Brokers Group, Inc. (IEX:IBKR) has provided an update on litigation matters. The update is included in the 10-K report the broker filed on Thursday, February 28, 2019, with the Securities and Exchange Commission (SEC).

The broker reiterates its intentions to defend itself in a class action brought by one of its former customers.

On December 18, 2015, a former individual customer filed a purported class action complaint against Interactive Brokers LLC, IBG, Inc., and Thomas Frank, PhD, the Company’s Executive Vice President and Chief Information Officer, in the U.S. District Court for the District of Connecticut. The complaint alleges that the former customer and members of the purported class of IB LLC’s customers were harmed by alleged “flaws” in the computerized system used by the Company to close out (i.e., liquidate) positions in customer brokerage accounts that have margin deficiencies.

The complaint seeks, among other things, undefined compensatory damages and declaratory and injunctive relief.

On September 28, 2016, the District Court issued an order granting Interactive Brokers’s motion to dismiss the complaint in its entirety, and without providing plaintiff leave to amend.

On September 28, 2017, the plaintiff appealed to the United States Court of Appeals for the Second Circuit. On September 26, 2018 the Court of Appeals affirmed the dismissal of plaintiff’s claims of breach of contract and commercially unreasonable liquidation but vacated and remanded back to the District Court plaintiff’s claims for negligence.

On November 30, 2018, the plaintiff filed a Second Amended Complaint. The broker filed a motion to dismiss the new complaint on January 15, 2019 requesting that the District Court dismiss the remaining negligence claims.

In its 10-K report, Interactive Brokers notes that, regardless of the ultimate outcome of the motion to dismiss, the company does not believe that a purported class action is appropriate given the great differences in portfolios, markets and many other circumstances surrounding the liquidation of any particular customer’s margin-deficient account.

“Interactive Brokers LLC and the related defendants intend to continue to defend themselves vigorously against the case and, consistent with past practice in connection with this type of unwarranted action, any potential claims for counsel fees and expenses incurred in defending the case shall be fully pursued against the plaintiff”.

  • Read this next

    Market News

    Eurozone Fights Stagnation Whilst Stock Indices Rally

    European stock markets are defying economic gloom as they continue to soar to all-time highs, showcasing resilience amidst broader economic challenges.


    Lisk Partners with Indonesia’s Communications Ministry to Boost Web3 Startup Ecosystem

    Discover the strategic partnership between Lisk and the Indonesian Ministry of Communications and Informatics, aimed at propelling local Web3 startups to new heights through comprehensive support and education.

    Executive Moves

    Admirals appoints founder Alexander Tsikhilov as CEO

    “Striking the right balance between sourcing new talent and developing and harnessing the strength and capabilities of our current workforce, is key to achieving our vision.”

    Executive Moves

    GCEX appoints Ignacio Corral and Helen Man to UK operation

    GCEX has announced the appointment of Ignacio Corral and Helen Man to its UK FCA-regulated operation based in London as the firm further expands its global business on account of increasing demand for its digital prime brokerage services.

    Retail FX, Uncategorized to shut down UK operation after eight months’s UK withdrawal reflects broader market dynamics, where increased competition among retail investing platforms, including newcomers like Robinhood and Webull, pressures companies to consolidate their efforts in their most profitable or strategic markets.

    Industry News

    UK FCA commits to swifter enforcement actions

    “Reducing and preventing serious harm is a cornerstone of our strategy. By delivering faster, targeted and transparent enforcement, we will reduce harm and deter others. We will also make greater use of our intervention powers to stop harm in real time.”

    Digital Assets

    Ultimate Crypto Trading Software: Zent Launches Innovative Platform For All Institutional Needs

    Zent, a pioneering software provider for financial institutions, has unveiled its all-in-one platform for high-speed crypto trading across popular exchanges. The “ultimate tool tailored to institutional teams and trading volumes” offers distinct advantages, eliminating hurdles like delays and market impact.

    Digital Assets

    OKX officially launches Turkish crypto trading platform

    “With a crypto adoption rate close to 50%, Türkiye represents a very dynamic and promising market for the industry as it continues to develop. The population’s high level of engagement and understanding of digital assets makes it an ideal environment for OKX, and we’re strongly committed to helping continue to grow this already vibrant ecosystem.”

    Retail FX

    ZA Bank launches US stock trading service ZA Invest

    ZA Invest provides access to over 6,000 US stocks and 3,000 ETFs, and a promotional USD savings interest rate of up to 10% p.a. for eligible users.