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Interactive Brokers (IBKR) Fined $1.75M for Trading System Fault
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Interactive Brokers Group, Inc. (IBKR - Free Report) has agreed to pay $1.75 million as penalty for failing to adequately prepare its electronic trading system before the historic plunge in crude oil prices last year. The U.S. futures regulator alleged that when oil prices plunged to below zero on Apr 20, 2020, the negative price was not displayed to the brokerage firm’s customers, who were unable to place limit orders to buy or sell.
Because of the mistake, hundreds of customer accounts holding oil futures were impacted. Notably, losses exceeding $80 million were incurred.
Vincent McGonagle, the Commodity Futures Trading Commission’s (“CFTC”) acting director of enforcement, stated, “This enforcement action demonstrates that the CFTC will hold registrants responsible for their handling of customer accounts and ensuring the integrity of trades on their trading platforms and electronic systems, including during instances of market volatility.”
Interactive Brokers neither admitted nor denied the regulator’s findings.
The company stated, “We are pleased to resolve this matter and pleased that the CFTC recognized our proactive compensation of our affected customers.”
Interactive Brokers’ fine was reduced by the CFTC because of its substantial cooperation during the investigation.
So far this year, shares of Interactive Brokers have gained 7.1% compared with 36.6% growth recorded by the industry.
Recently, JPMorgan (JPM - Free Report) agreed to pay $15.7 million to settle a class-action lawsuit by investors who accused the bank of intentionally manipulating the prices of U.S. Treasury futures and options.
For Wells Fargo & Company, (WFC - Free Report) legal hassles seem to be far from over. After facing a penalty and enforcement action entailing business restrictions earlier this month, the firm was slapped with a $37-million fine by the Department of Justice for deceitfully overcharging commercial clients on foreign exchange services.
Charles Schwab (SCHW - Free Report) was also slapped with a class-action lawsuit over violations of its fiduciary duty by placing its own interest before the protection of its clients through the bank’s robo-adviser Schwab Intelligent Portfolios’ cash sweep program. The case, filed in the U.S. District Court in Northern California, also accused the company of breach of contract and violation of state laws.
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Interactive Brokers (IBKR) Fined $1.75M for Trading System Fault
Interactive Brokers Group, Inc. (IBKR - Free Report) has agreed to pay $1.75 million as penalty for failing to adequately prepare its electronic trading system before the historic plunge in crude oil prices last year. The U.S. futures regulator alleged that when oil prices plunged to below zero on Apr 20, 2020, the negative price was not displayed to the brokerage firm’s customers, who were unable to place limit orders to buy or sell.
Because of the mistake, hundreds of customer accounts holding oil futures were impacted. Notably, losses exceeding $80 million were incurred.
Vincent McGonagle, the Commodity Futures Trading Commission’s (“CFTC”) acting director of enforcement, stated, “This enforcement action demonstrates that the CFTC will hold registrants responsible for their handling of customer accounts and ensuring the integrity of trades on their trading platforms and electronic systems, including during instances of market volatility.”
Interactive Brokers neither admitted nor denied the regulator’s findings.
The company stated, “We are pleased to resolve this matter and pleased that the CFTC recognized our proactive compensation of our affected customers.”
Interactive Brokers’ fine was reduced by the CFTC because of its substantial cooperation during the investigation.
So far this year, shares of Interactive Brokers have gained 7.1% compared with 36.6% growth recorded by the industry.
Currently, Interactive Brokers carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Legal Hassles Faced by Other Finance Companies
Recently, JPMorgan (JPM - Free Report) agreed to pay $15.7 million to settle a class-action lawsuit by investors who accused the bank of intentionally manipulating the prices of U.S. Treasury futures and options.
For Wells Fargo & Company, (WFC - Free Report) legal hassles seem to be far from over. After facing a penalty and enforcement action entailing business restrictions earlier this month, the firm was slapped with a $37-million fine by the Department of Justice for deceitfully overcharging commercial clients on foreign exchange services.
Charles Schwab (SCHW - Free Report) was also slapped with a class-action lawsuit over violations of its fiduciary duty by placing its own interest before the protection of its clients through the bank’s robo-adviser Schwab Intelligent Portfolios’ cash sweep program. The case, filed in the U.S. District Court in Northern California, also accused the company of breach of contract and violation of state laws.