IN NO EVENT SHALL IB'S LIABILITY, REGARDLESS OF THE FORM OF ACTION AND DAMAGES SUFFERED BY CUSTOMER, EXCEED THE HIGHEST TOTAL MONTHLY COMMISSIONS PAID BY CUSTOMER TO IB OVER THE 6 MONTHS PRIOR TO ANY INCIDENT.
Quote from gumtrader:
I am not a lawyer, but it seems that the 6 month commission thing is in a paragraph that deals with their liability as related to outages, so it seems the interpretation would be be only for outages.
Though in another part of the agreement that is not shown here, it says "Customer remains responsible for all transactions entered using the customers name/password". It seems this is the part that absolves them from any liability due to ID theft.
I am not a lawyer.
gumtrader,
I have doubts that you are correct. I don't see how this new disclaimer is limited to just outages or to just identity theft. The disclaimer seems to say it applies regardless of the specifics of a customer's claim. I am concerned about the risks this poses to the customer, for example, in the event that IB goes bankrupt. I fear that in a bankruptcy, a customer's bankruptcy claim would entitle him only to the amount he paid in commissions over the past 6 months. I fear that customers might be at risk, from this disclaimer, in many other types of situations as well, other than just bankruptcy. I am also concerned about the risks that different judges, attorneys, bankruptcy administrators, etc, might interpret the disclaimer in different and in unpredictable ways.
Quote from rwk:
You still have SIPC coverage for $100k, plus private coverage for an additional $900k:
http://www.interactivebrokers.com/en/accounts/accountProtection.php?ib_entity=llc
The new policy simply points out that IB is not responsible for customers' mistakes (e.g. ID theft).
[rwk]
I also have doubts as to whether rwk is correct. I don't see how this new disclaimer is limited to just mistakes by customers. It seems to deprive customers of protection when a mistake is made by IB, or even when IB or its employee does something deliberately wrong, or even when IB goes bankrupt and the customer needs to get back his cash and other property from IB.
I also have concerns as to whether the new disclaimer deprives IB customers of SIPC coverage. SIPC insures the return of customer property which the broker owes to the customer. See
http://www.sipc.org/how/brochure.cfm. But the new disclaimer limits the broker's debt to the commissions the customer paid in the past 6 months, so perhaps, SIPC coverage will also be limited to that number. This would generally be a small fraction of normal SIPC coverage, which would normally insure the entire account up to $100,000 in cash or $500,000 in securities, and would normally also provide certain additional, more complicated protections for losses beyond those limits (a pro-rata distribution of customer property held in street name).
I hope IB will explain this new disclaimer and also try to come up with a revised agreement which gives at least some protection to the customer, as well as to IB.
). My opinion is that this clause (or any of the others for that matter) does not modify SIPC. SIPC can only be modified by SIPC. And SIPC terms are made clear via their website and through various case law. An undisclosed modification of SIPC would not be legal, and might well constitute fraud.