Wrongful Liquidation Scam

Discussion in 'Retail Brokers' started by pdcaz, Feb 26, 2011.

  1. I know IB isn't know for its friendly customer service or liquidation procedures, but I had a very good experience I thought I'd mention as a counterpoint.

    As you might guess from my handle, I'm not afraid to run close to the liquidating edge of my portfolio margin. On Fri after the close when a cash merger in progress put me over the edge, I put in a ticket request for it to be reviewed. I got a call on the weekend from the rep working on it, as well as several Monday before the open. Everything got resolved reasonably and I was able to avoid any forced liquidation when they adjusted the maintenance margin for that position.
     
    #21     Jun 11, 2012
  2. Options12

    Options12 Guest

    These blogs about Interactive Brokers come and go.

    Before Citta there was underactivebreakers.com. And most recently another one called interactivebrokersfraud.org

    To mgcorrei: Check out FINRA's proposed margin rule changes. They plan to address margin for spreads and other issues. There may be some relevance to your situation.

    The changes are discussed here: http://www.sec.gov/rules/sro/finra/2012/34-67088.pdf

    Also, the first complaint in the file below (it's a big file) has to do with a complaint in which the margin requirement for a spread went out-of-whack and nearly resulted in a liquidation of the position. This spread involved options on futures, but it's unclear if there was any resolution since the SEC declined to address the complaint since futures issues fall under CFTC oversight.

    http://interactivebrokersfraud.org/images/InteractiveBrokersComplaintFile2.pdf


     
    #22     Jun 28, 2012

  3. Your puss would be praised if your account was UP over 20% inside of 30-minutes. It would be Fancy Feast + catnip mice, for life !
     
    #23     Jun 28, 2012
  4. mgcorrei

    mgcorrei

    Thanks for the advice guys. I have no problem with IB's 50:1 leverage threshold. The problem i have is that it is not disclosed clearly and if it had been i would have never opened an account. Look at their website, clicking on trading>margin>options. There is nothing here indicating a 50:1 leverage cap on credit spreads or any of these option strategies, not in the foot notes... no where. How is a leverage cap even applicable to a fixed loss trade anyways where the max loss on the trade is sitting in margin? Hopefully the arbitrators will see it my way. I'll post here what happens.
     
    #24     Sep 17, 2012
  5. I had crazy liquidation by IB too. That was mostly in 2008. I had a small account and didn't do much about it. I had options spreads that the max loss was limited, but it seems that IB software those days might not looked at both legs of the spread.
     
    #25     Sep 19, 2012
  6. mgcorrei

    mgcorrei

    Interesting hippie... you should have done something about it. Interactive Brokers is a bunch of first class idiots. For example, looking at one of my portfolios they force liquidated I was holding credit spreads where my maximum loss would have been $8,380... I was only a little more than half margined.... they force liquidated me and instead made me incur a loss of $11,761...well in excess of my previous max loss. Then they have the nerve to tell me i'm wreckless... I am furious. :mad:
     
    #26     Sep 19, 2012
  7. Sig

    Sig

    I'm interested what the outcomes were for those who took legal or arbitration action against IB? I ran into the 50:1 rule for the first time this AM. I had only debit spreads on SPX open in my account and cash, meaning I'd already paid the max I could lose and still had plenty of cash sitting in my account as well, something like 1/3 of the account value. Luckily I didn't get auto-liquidated, only stopped from entering new positions for a few minutes. At the time there were some crazy quotes, like $-4.00/+$9.00 on a 5 point credit spread (which will never have an actual value outside of $0-5), which I presume caused IB's poorly programmed computer to throw the block.
    I went ahead and put in a GTC order for all my existing positions at $0.00 and the block went away, although it could have just gone away randomly rather than because of my actions. Its sad that IB is so stupid that they don't realize that a credit spread you've already paid for will never expose you to an iota more risk, ever, no matter what. Their CS rep couldn't wrap his head around that, just kept repeating "we are being conservative with risk" over and over like a mantra. Also sad that you can trick their algorithm that easily. It also makes you wonder. Since their system is programmed by apparent financial ignoramuses, how many dangerous holes also exist that could be exploited against them and us as their customers by a nefarious actor?
     
    #27     Aug 24, 2015
  8. dealmaker

    dealmaker


    You have to go to arbitration before you can go to a class action trial...You'll need a lot more money than you think...
     
    #28     Aug 24, 2015
  9. xandman

    xandman

    A little bit late.

    upload_2015-8-24_19-27-53.png
     
    #29     Aug 24, 2015