Interactive Brokers (IBKR) fined $ 1.75 million for trading system failure
Interactive Broker Group, Inc. IBKR has agreed to pay $ 1.75 million as a penalty for not adequately preparing its electronic trading system before the historic drop in crude oil prices last year. The US futures regulator alleged that when oil prices fell below zero on April 20, 2020, the negative price was not shown to clients of the brokerage firm, who were unable to pass. limit buy or sell orders.
As a result of the error, hundreds of customer accounts holding oil futures contracts were affected. Notably, losses of over $ 80 million were incurred.
Vincent McGonagle, Acting Director of Enforcement of the Commodity Futures Trading Commission (âCFTCâ), said: âThis enforcement action demonstrates that the CFTC will hold registrants accountable for their accounts receivable management and integrity. transactions on their trading platforms and systems, including in the event of market volatility.
Interactive Brokers neither admitted nor denied the regulator’s findings.
The company said, âWe are delighted to resolve this issue and delighted that the CFTC recognizes our proactive indemnification of our affected customers. “
The fine imposed on Interactive Brokers was reduced by the CFTC due to its substantial cooperation during the investigation.
So far this year, shares of Interactive Brokers have gained 7.1% against industry growth of 36.6%.
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Currently, Interactive Brokers carries a Zacks Rank # 3 (Hold). You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.
Legal issues faced by other finance companies
Recently, JP Morgan JPM agreed to pay $ 15.7 million to settle a class action lawsuit filed by investors who accused the bank of intentionally manipulating the prices of US Treasury futures and options.
For Wells Fargo & Company, WFC’s legal hassles seem far from over. After facing sanction and enforcement action resulting in trade restrictions earlier this month, the company was fined $ 37 million by the Justice Department for deceptively overcharging business customers on foreign exchange services.
Charles Schwab SCHW has also been the subject of a class action lawsuit for breaching its fiduciary duty by putting its own interest ahead of protecting its clients through the bank’s robotic advisor Schwab Intelligent Portfolios’ liquidity sweep program. The case, filed in U.S. District Court in Northern California, also accused the company of breach of contract and violation of state laws.
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