Customers of Interactive Brokers file class action complaint over management of portfolio margin acc

[d08]

Another interesting problem I've mentioned is PM treatment of certain equities where you have leverage below one, equities traded on regulated exchanges and that have decent liquidity (if that matters). This is all relatively new and quite insane. People who defend stuff like this don't seem to understand it.

 

[Gambit]

IB's problem is , if they let accounts drawdown, I suspect the percent of deadbeats is quite high

I agree. So don't let trader's margin their accounts to the limit and then liquidate them fast and furious style. If IB doesn't adhere to SPAN, PM margin or any standard method of margining clients, why wait till the absolute last minute to "manage risk"? What's the incentive to wait till traders blow up and then auto liquidate?

 

[Robert Morse]

Interactive Brokers is said to have been informed by both FINRA regulators and the Options Clearing Corporation that unsecured debt instruments such as the VXX are ineligible for portfolio margin and risk-based margining treatment.

I find this comment confusing. I placed a position of short 1000 VXX into the OCC PM Calculator and the result was a 15% shock. And, if the symbol were not PM eligible, it would not be in the database. It is also unclear to me how, if the "class" is certified, were the clients harmed by receiving risk-based margining treatment?

 

[lovethetrade]

I don't know anything about this case but I love it when I hear about class action lawsuits against wealthy organisations, many of which assume they're untouchable either because the damages aren't large enough to warrant an individual pursuing it or the individual doesn't have the capital to fund litigation.

The plaintiffs usually end up getting diddly-squat out of it but they get justice by making the corporation pay a heavy price for their self serving and unconscionable behaviour.

 

[d08]

I don't know anything about this case but I love it when I hear about class action lawsuits against wealthy organisations, many of which assume they're untouchable either because the damages aren't large enough to warrant an individual pursuing it or the individual doesn't have the capital to fund litigation.

This isn't one of those cases though. They lost money because of their worthless money manager and want to blame IB for it. I don't see how IB behaved as a "big mean corporation" in this case. In the end, it's all nice and dandy but the rest of the customers will end up paying for it.

 

[Robert Morse]

One more thought. Since every client agrees to litigate through arbitration, I don’t see how this goes anywhere without a criminal case 1st by FINRA and the SEC.

 

[Euler09]

That's pathetic - No doubt they would not have complained had they made a nice profit. Brokers would be wise to blacklist these dim wits. We all know that only the richest banksters and 1%ers like Trump get bailed out from risky bets that go bad.

It was a potential free roll. They may win something but they will still share some liability since they were aware of the risks regardless of ib's negligence in allowing them to assume such risk.

Owned.

 

[truetype]

had a phone call with these clients and told them to pare down their positions before a crisis.

"Before"? Now it's IB's job to predict big down days in S&P?

 

[Cuddles]

So short ibrk?

 

[lovethetrade]

This isn't one of those cases though. They lost money because of their worthless money manager and want to blame IB for it. I don't see how IB behaved as a "big mean corporation" in this case. In the end, it's all nice and dandy but the rest of the customers will end up paying for it.

If IB does lose the case I'm sure there'll be justice somewhere along the way whether they did wrong in this instance or not. 99% of these types of businesses never get to where they are by being fair, equitable and non-negligent.