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NEW YORK, NY – December 1, 2017 – A class action has been filed in the United States District Court for the Southern District of New York against online brokerage firm Interactive Brokers, LLC, on behalf of investors who held certain portfolio margin accounts within the past six years. The investors allege that Interactive Brokers violated Financial Industry Regulatory Authority (“FINRA”) rules and its own customer agreements in administering client portfolio margin accounts.
Plaintiffs’ Complaint alleges that Interactive Brokers is one of only a few FINRA firms authorized to extend portfolio margin to its customers’ accounts. Portfolio margin is a complicated formula based securities backed loan account that can be far riskier than traditional margin most brokerage firms offer. Because of this additional risk, there are strict rules in place to protect investors from suffering crippling losses. Plaintiffs’ Complaint claims that Interactive Brokers does not follow FINRA’s rules properly because it permits portfolio margin accounts to invest in Exchange Traded Notes (“ETNs”). ETNs are not approved for portfolio margin because, according to FINRA, the inherent risks associated with ETNs make them inappropriate for portfolio margin treatment. As a result, Plaintiffs’ Complaint alleges that Interactive Brokers exposed its customers to excessive investment risk that FINRA rules were designed to avoid and that investors suffered substantial losses from prohibited ETN portfolio margin investments. This is especially true on days like on August 24, 2015, when the Dow Jones Industrial Average suddenly dropped by over 1,000 points.
Plaintiffs’ Complaint also alleges that not only did Interactive Brokers know it was in violation of FINRA rules when it was making these prohibited trades, but that it specifically ignored guidance from the securities regulators to stop its conduct. As a result of Interactive Brokers’ actions, the Complaint alleges that investors have suffered significant losses in their portfolio margin accounts.
The investors are represented by Frederic S. Fox, Laurence D. King, Donald R. Hall, and Matthew B. George of Kaplan Fox & Kilsheimer LLP, David Meyer and Matthew Wilson of Meyer Wilson Co., LPA, and Samuel B. Edwards and David W. Miller of Shepherd, Smith, Edwards & Kantas, LLP. Plaintiffs’ counsel have extensive experience in prosecuting investor class actions and recovering investor losses in arbitration.
Plaintiffs’ counsel are also investigating whether other brokerages engaged in prohibited investment practices relating to portfolio margin accounts. Investors who would like more information about this lawsuit or investigation should visit www.portfoliomarginlosses.com or call 888-390-6491. For more information about this press release or lawsuit, please contact:
Frederic S. Fox
KAPLAN FOX & KILSHEIMER LLP
850 Third Avenue, 14th Floor
New York, New York 10022
(800) 290-1952
(212) 687-1980
Fax: (212) 687-7714
E-mail:
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Laurence D. King
KAPLAN FOX & KILSHEIMER LLP
350 Sansome Street, Suite 400
San Francisco, California 94104
(415) 772-4700
Fax: (415) 772-4707
E-mail:
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David P. Meyer
Matthew R. Wilson
MEYER WILSON CO., LPA
1320 Dublin Road, Suite 100
Columbus, Ohio 43215
(888) 390-6491
Fax: (614) 224-6066
Email:
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and
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Samuel Edwards
David Miller
SHEPHERD, SMITH, EDWARDS & KANTAS, LLP
1010 Lamar, Suite 900Houston, Texas 77003
(800) 259-9010
Fax: (713) 227-7215
E-Mail:
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and
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This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and ethical rules.
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