Must be easy to compete with IB. Why don't you create that competitor? Maybe I'll sign up. I guess you could be worried that IB is going down the toilet because a new agreement is in place. However, I am not concerned at all - IB has always been fair with their policies and actions and I will continue to think this way until IB proves me wrong. Any brokerage will have good days and bad, but overall IB is tops for cost effectiveness at this moment in time.
Does this mean that if IB made an accounting error, or perhaps a theft, resulting in a million dollars missing from the account of a customer who generated only $1,000 in commissions over the past six months, the customer could sue IB for only $1,000, and would have no legal remedy by which to recover the remaining $999,000?
As I read paragraph 27, the paragraph in question, IB is liable for nothing...but in the event they are ever found liable, they are only liable to the extent of 6 months of commissions. In other words, you'll be lucky to get 6 months of commissions since the agreement states they are liable for nothing. And frankly, there is nothing new there...they have always been liable for nothing. My view would be that this enables IB to make a business decision in matters of potential liability. OldTrader
Well, it seems to me something is new. I think that in the past, we at least had the right to get back whatever funds we had on deposit with IB. This new disclaimer seems to say a customer has no rights at all to the return of his own money, beyond whatever commissions he generated over the past 6 months. So it seems like if IB just doesn't feel like returning our funds, it doesn't have to do so. We can only rely on IB's desire to maintain its business reputation, as an incentive to return our funds to us. But what if IB went bankrupt? If IB went bankrupt, then IB would have no incentive to maintain its reputation. Would the new disclaimer mean we are not entitled to sue to get our funds returned? Would the new disclaimer eliminate the protections and priorities normally afforded to securities and futures trading accounts? Would the bankruptcy judge rule that IB owes its customer nothing, beyond the past 6 months of commissions generated by that customer? I've always argued that IB provides superior protection against the risk of broker bankruptcy, but now I am concerned that this new disclaimer may change everything.
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 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.
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. 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. 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.
I doubt you'll see any modification. I think this attempt to sidestep any and all liability is standard fare. What is new is the clause that puts a dollar amount on their liability (even though they have none... ). 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. Just an observation: These customer agreements are typically one-sided agreements....there is no attempt to be fair at all. Courts often have a problem with one-sided agreements. My attorney has typically counselled me to lean over backwards to create a fair agreement due to fear of how a court might react toward an patently unfair document such as the type that brokerage firms typically require. OldTrader
No self-esteemed customer in his right mind would accept such a defective disclaimer. They seem working towards pushing out last reasonable clients. As for SIPC coverage it gets involved only when a brokerage firm fails, i.e. as long as IB stays in business you can't seek protection from SIPC. Besides: http://sipc.org/who/notfdic.cfm
Say Bell, perhaps you could direct us to a firm who has a "reasonable" customers agreement? Frankly, I don't think you can...I've personally never seen one. OldTrader