A lawsuit has been launched earlier this week at the Northern District Court of California against E*TRADE Futures LLC and E*TRADE Securities LLC. The plaintiffs in the case are three customers of the brokerage: Aziz Si Hadj Mohand, Benjamin Whitesides, and Matthew Cheung.
Unprepared For Oil Crash
The plaintiffs’ issue with E*TRADE is regarding the crash that occurred within the crude oil futures market back on the 20th of April, 2020. The plaintiffs claim that the possibility of oil futures going into negative pricing territory was a known possibility even before the COVID-19 pandemic. However, on the 20th of April, this possibility turned into a very grim reality.
The benchmark West Texas Intermediate (WTI) crude oil futures were settled at negative ($37.63) by the market’s closing time on the 20th of April, 2020. This was for the May contracts that were set to expire on that day. With regular futures sliding, E-mini futures were quick to follow. However, the plaintiffs stated that this trapped traders that couldn’t see accurate pricing information, and couldn’t trade at negative prices, as well. This, the plaintiffs claim, was due to limitations within the electronic trading system of E*TRADE itself.
Leaving Customers High And Dry
The complaint detailed that many things occurred at once, at that point. The oil price saw a decline into negative territory, with the E*TRADE system itself being unprepared for negative pricing. Alongside this, it failed to accurately display prices, and even locked users out who attempted to enter orders with negative values. This, in turn, resulted in an outage of the trading platform, going through the end of the trading session on the 20th of April, 2020. As a direct result of this outage, customers of E*TRADE were incapable of exercising futures contracts on WTI through the app, website, or call center of E*TRADE.
Furthermore, customers were further incapable of obtaining accurate information or even meaningful support from the customer service of E*TRADE during this time, according to the complaint.
Claiming Failure From E*TRADE
The plaintiffs claim that E*TRADE had failed to properly or adequately equip itself systemically and technologically in order to maintain access to trading services to both the class members and the plaintiffs themselves.
The plaintiffs subsequently claimed that E*TRADE had failed to maintain an adequate infrastructure and displayed clear negligence. As a result, the plaintiffs claim that E*TRADE had failed in its obligations to both the class members and the Plaintiffs, causing significant losses.