IB pays $600k settlement for poor auto-liquidation

MoreLeverage said:
Hedge fund customer took them to arbitration seeking $1-3M in damages for their auto-liquidation. At issue was closing transactions executed at prices away from the market, which when used to remark their book, increased the size of the call dramatically and resulted in even more liquidation.

http://www.reuters.com/article/2015...active-auto-liquidation-idUSL1N0VS1PH20150218
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Wow! that's news to know they can be held liable for how they auto-liquidate. Maybe they can be liable also for arbitrary changes in margin requirement leading to auto-liquidation.
 
It's still better to avoid the situation in the first place. I didn't find more details, but if the customer got back $0.50 on the dollar of losses, they're still in the hole and this was a case from 2011 so they had to wait years and probably hire lawyers too. Perhaps one lesson here is to set the 'liquidate last' flag for your winners rather than your losers, just in case ;).
 
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