legal action against my online broker

On August 5 when stocks were dropping big, this broker started to transfer my account to a different clearing firm. on Aug 4th I called to check the transfer status, they told me the transfer won't happen until a week later, and they said that during the transfer process I will have access to my account as usual and there will be no service interruption.

However, when the market opened I found that I still had no access to the new account. For the first 45 minutes of market open on Aug 5th I was totally blocked out of my online trading account, and I had no access to any of my existing position and I couldn't open any trade for the time window when I need access the most and the market was nose diving huge.

I did call the broker, and they admitted there is a problem in the transfer process, and the new positions were not properly set up in the new account. It took them 45 mintues to manually add the positions by hand one by one. Even after this was done, some positions were still not correctly transferred. During this period the market dropped big and the VIX surged and I couldn't do anything to cut my loss.

Even after the access was restored my positions were not properly transferred to the new clearing firm account and many position data were wrong.
Since I didn't have access to the correct report data, it greatly impacted my ability to make trading decisions. That made it impractical to even place a phone order with them. I have the proof of email communications on that morning, and I saved all account history data.

As a result I had huge loss in my options margin account because of their mishandling.

In my opinion I have a case of broker's negligence in mis-handling my account transfer in timely and properly manner which resulted in my big loss.

Do you think I have a case for legal actions against this broker? What's my odds of winning?

Or, should I approach the broker directly for loss recovery?

I found a securities laywer with high rating, but not sure if I can trust them.

Can anyone recommend a good lawyer in this area? How do they typically charge?

Thanks and best regards,

I once ahd a broker that delayed a transfer for 10 days. Some operate like mafia. Maybe mafia ownes some of them. Some others are very good.

Hi bigwin7,
I'm not a legal expert and have no knowledge or training in this field. However, if I were you, I'd approach your broker first with your complaint and only seek professional legal advice if the broker refuses either to compensate you or provide you with a satisfactory explanation. You never know, they may put up their hands and say fair enough - and restore your account balance to an acceptable level. Cynics will say 'yeah right, and pigs will fly', but there are enough tales of brokers compensating their clients on here to suggest they aren't all crooks! Also, put yourself in the shoes of your broker. If they get a letter from a legal firm threatening them with all manner of nasties, it's likely to get their backs up. If I was in their shoes, I'd wonder why you didn't just pick up the phone or send an e-mail outlining your concerns. So, I suggest you only go down the legal route when all other avenues have been exhausted. Not least, it'll save you a pretty penny or two.
Tim.

Is your broker regulated by the NFA or another body? If so complain to them. I saw they recently fined a company for too much platform downtime. I'll try to find that case for you and post it. The NFA can order restitution so that is much better than paying some lowlife lawyer who is only interested in taking fees off you.

Thanks everyone for the information. Yes, my broker is FINRA & NFA registered Broker/Dealer. I will find out how to complain through them.
Thanks again.

bigwin7 said:

Thanks everyone for the information. Yes, my broker is FINRA & NFA registered Broker/Dealer. I will find out how to complain through them.
Thanks again.

Click to expand...

NFA supposedly has an online reporting facility. However last time I used it they never replied so I had to follow up by e mail. I think they have e mail contacts published on their website. Have a look through their previous enforcement actions, they make good reading.

Not all are crooks--they may be negligent but I hope that they will put your matter to rights without lawyers, etc.

I include an excerpt from one of my posts in 2006, much different to yours but it might cheer you up a bit.

"When I was telephone trading with City Index, before the online started, one of my phone calls was not obeyed, with the result that I was open when I should have been closed. They politely told me that I had to prove it, because their dealers did not make those kind of mistakes.

I was index trading at the time and my potential loss was running into several thousand pounds. Fortunately, for me, I lived in Spain and international calls are logged. Telefonica came up with the dates and times for the period, posted them to me and there were four calls that morning, where CI said that there were only three. Open, close, open close- I knew I was right. CI were full of apologies and they altered my account to show a 500 pound profit.

However, it was the end a of a good relationship. I didn't feel comfortable with them and closed the account.

The web seems to have corrected the possibilities of making that kind of mistake as the account status is on view, but the story has a lesson that would have cost me dearly if I had lived in the UK. With local calls, how could I have proved that I was right?

Remember that , sometimes, it is necessary to close a position by phone so protect yourselves in some way. With big positions (for me) I ring again to confirm my position if I am away from my computer and can't check my account."

Split."

Thanks split, that's good information.

bigwin7 said:

Thanks split, that's good information.

Click to expand...

Let us know how it goes.